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Proposed Rule

Medicare Program; Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2011

Action

Proposed Rule.

Summary

This proposed rule addresses proposed changes to the physician fee schedule and other Medicare Part B payment policies to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. It also addresses, implements or discusses certain provisions of both the Affordable Care Act and the Medicare Improvements for Patients and Providers Act of 2008. In addition, this proposed rule discusses payments under the Ambulance Fee Schedule, Clinical Laboratory Fee Schedule, payments to ESRD facilities, and payments for Part B drugs. Finally, the proposed rule includes a discussion regarding the Chiropractic Services Demonstration program, the Competitive Bidding Program for Durable Medical Equipment and Provider and Supplier Enrollment Issues associated with Air Ambulances. (See the Table of Contents for a listing of the specific issues addressed in this proposed rule.)

Unified Agenda

Amendment to Payment Policies Under the Physician Fee Schedule and Part B for CY 2011 (CMS-1503-F2)

4 actions from July 13th, 2010 to January 10th, 2011

  • July 13th, 2010
  • September 24th, 2010
    • NPRM Comment Period End
  • November 29th, 2010
  • January 10th, 2011
 

Table of Contents Back to Top

Tables Back to Top

DATES: Back to Top

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on August 24, 2010.

ADDRESSES: Back to Top

In commenting, please refer to file code CMS-1503-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (please choose only one of the ways listed):

1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the instructions for “submitting a comment.”

2. By regular mail. You may mail written comments to the following address only:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1503-P, P.O. Box 8013, Baltimore, MD 21244-8013.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3. By express or overnight mail. You may send written comments to the following address only:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1503-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments before the close of the comment period to either of the following addresses:

a. For delivery in Washington, DC—Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201.

(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. For delivery in Baltimore, MD—Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-9994 in advance to schedule your arrival with one of our staff members.

Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

FOR FURTHER INFORMATION CONTACT: Back to Top

Rebecca Cole, (410) 786-4497, for issues related to physician payment and for all other issues not identified below.

Cheryl Gilbreath, (410) 786-5919, for issues related to payment for covered outpatient drugs and biologicals.

Roechel Kujawa, (410) 786-9111, for issues related to ambulance services.

Glenn McGuirk, (410) 786-5723, for clinical laboratory issues.

Randall Ricktor, (410) 786-4632, for Federally Qualified Health Center Issues.

Pauline Lapin, (410) 786-6883, for issues related to the chiropractic services demonstration BN issue.

Troy Barsky, (410)786-8873, or Kristin Bohl, (410)786-8680, for issues related to physician self-referral.

Troy Barsky, (410)786-8873, or Fred Grabau (410)786-0206, for issues related to timely filing rules.

Henry Richter, (410)786-4562, or Lisa Hubbard, (410)786-5472, for issues related to renal dialysis provisions and payments for end-stage renal disease facilities.

Diane Stern, (410)786-1133, for issues related to the physician quality reporting initiative and incentives for e-prescribing.

Sheila Roman, 410-786-6004, or Pamela Cheetham, 410-786-2259, for issues related to the Physician Resource Use Feedback Program and value-based purchasing.

Joel Kaiser, (410)786-4499, for issues related to the DME provisions.

Jim Bossenmeyer, (410)786-9317, for issues related to provider and supplier enrollment issues.

SUPPLEMENTARY INFORMATION: Back to Top

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.

Table of Contents Back to Top

To assist readers in referencing sections contained in this preamble, we are providing a table of contents. Some of the issues discussed in this preamble affect the payment policies, but do not require changes to the regulations in the Code of Federal Regulations (CFR). Information on the regulation's impact appears throughout the preamble, and therefore, is not discussed exclusively in section V. of this proposed rule.

I. Background

A. Development of the Relative Value System

1. Work RVUs

2. Practice Expense Relative Value Units (PE RVUs)

3. Resource-Based Malpractice (MP) RVUs

4. Refinements to the RVUs

5. Adjustments to RVUs Are Budget Neutral

B. Components of the Fee Schedule Payment Amounts

C. Most Recent Changes to Fee Schedule

II. Provisions of the Proposed Rule for the Physician Fee Schedule

A. Resource-Based Practice Expense (PE) Relative Value Units (RVUs)

1. Overview

2. Practice Expense Methodology

a. Direct Practice Expense

b. Indirect Practice Expense per Hour Data

c. Allocation of PE to Services

(i) Direct Costs

(ii) Indirect Costs

d. Facility and Nonfacility Costs

e. Services with Technical Components (TCs) and Professional Components (PCs)

f. Alternative Data Sources and Public Comments on Final Rule for 2010

g. PE RVU Methodology

(i) Setup File

(ii) Calculate the Direct Cost PE RVUs

(iii) Create the Indirect Cost PE RVUs

(iv) Calculate the Final PE RVUs

(v) Setup File Information

(vi) Equipment Cost per Minute

3. Proposed PE Revisions for CY 2011

a. Equipment Utilization Rate

b. HCPCS Code-Specific PE Proposals

(1) Biohazard Bags

(2) PE Inputs for Professional Component (PC) Only and Technical Component (TC) Only Codes Summing to Global Only Codes

(3) Equipment Time Inputs for Certain Diagnostic Tests

(4) Cobalt-57 Flood Source

(5) Venom Immunotherapy

(6) Equipment Redundancy

(7) Equipment Duplication

(8) Establishing Overall Direct PE Supply Price Inputs Based on Unit Prices and Quantities

c. AMA RUC Recommendations in CY 2010 for Changes to Direct PE Inputs

(1) Electrogastrography and Esophageal Function Test

(2) 64-Slice CT Scanner and Software

(3) Cystometrogram

(4) Breath Hydrogen Test

(5) Radiographic Fluoroscopic Room

d. Referral of Existing CPT Codes for AMA RUC Review

e. Updating Equipment and Supply Price Inputs for Existing Codes

B. Malpractice Relative Value Units (RVUs)

1. Background

2. Malpractice RVUs for New and Revised Services Effective Before the Next 5-Year Review

3. Revised Malpractice RVUs for Selected Disc Arthroplasty Services

C. Potentially Misvalued Codes Under the Physician Fee Schedule

1. Valuing Services Under the PFS

2. Identifying, Reviewing, and Validating the RVUs of Potentially Misvalued Services Under the PFS

a. Background

b. Progress in Identifying and Reviewing Potentially Misvalued Codes

c. Validating RVUs of Potentially Misvalued Codes

3. CY 2011 Identification and Review of Potentially Misvalued Services

a. Codes on the Multi-Specialty Points of Comparison List

b. Codes With Low Work RVUs Commonly Billed in Multiple Units Per Single Encounter

c. Codes With High Volume and Low Work RVUs

d. Codes With Site-of-Service-Anomalies

e. Codes With “23-hour” Stays

4. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy to Additional Nonsurgical Services

a. Background

b. Proposed CY 2011 Expansion of the Imaging Technical Component MPPR Policy to Additional Combinations of Imaging Services

c. Proposed CY 2011 Expansion of the MPPR Policy to Therapy Services

5. High Cost Supplies

a. Background

b. Future Updates to the Prices of High-Cost Supplies

D. Geographic Practice Cost Indices (GPCIs)

1. Background

2. GPCI Update

a. Physician Work GPCIs

b. Practice Expense GPCIs

(1) The Affordable Care Act Requirements for PE GPCIs

(2) Summary of CY 2011 Proposed PE GPCIs

c. Malpractice GPCIs

d. General GPCI Update Process

3. Payment Localities

E. Physician Fee Schedule Update for CY 2011

1. Rebasing the Medicare Economic Index (MEI)

a. Background

b. Use of More Current Data

c. Rebasing and Revising Expense Categories in the MEI

(1) Developing the Weights for Use in the MEI

(2) Physician's Own Time

(3) Physician's Practice Expenses

(A) Non-Physician Employee Compensation

(B) Office Expenses

(C) Professional Liability Insurance (PLI) Expense

(D) Medical Equipment Expenses

(E) Medical Supplies Expenses

(F) All Other Professional Expenses

d. Selection of Price Proxies for Use in the MEI

(1) Expense Categories in the MEI

(A) Physician's Own Time (Physician Compensation)

(B) Nonphysician Employee Compensation

(C) Utilities

(D) Chemicals

(E) Paper

(F) Rubber and Plastics

(G) Telephone

(H) Postage

(I) All Other Labor-Intensive Services

(J) Fixed Capital

(K) Moveable Capital

(L) Professional Liability Insurance

(M) Medical Equipment

(N) Other Professional Expenses

(2) Productivity Adjustment to the MEI

e. Results of Rebasing

f. Adjustments to the RVU Shares to Match the Proposed Rebased MEI Weights

III. Code-Specific Issues for the PFS

A. Therapy Services

1. Outpatient Therapy Caps for CY 2011

2. Alternatives to Therapy Caps

a. Background

b. Current Activities

c. Potential Short-Term Approaches to Therapy Caps

B. Diabetes Self-Management Training (DSMT) Services (HCPCS Codes G0108 and G0109)

1. Background

2. Proposed Payment for DSMT Services

C. End-State Renal Disease Related Services for Home Dialysis (CPT Codes 90963, 90964, 90965, and 90966)

1. End-Stage Renal Disease Home Dialysis Monthly Capitation Payment Services (CPT Codes 90963, 90964, 90965, and 90966)

2. Daily and Monthly ESRD-Related Services (CPT Codes 90951 Through 90970)

D. Portable X-Ray Set-Up (HCPCS Code Q0092)

E. Pulmonary Rehabilitation Services (HCPCS Code G0424)

F. Application of Tissue-Cultured Skin Substitutes to Lower Extremities (HCPCS Codes GXXX1 and GXXX2)

G. Canalith Repositioning (CPT Code 95992)

H. Intranasal/Oral Immunization Codes (CPT Codes 90467, 90468, 90473, and 90474)

I. Refinement Panel Process

J. Remote Cardiac Monitoring Services (CPT Codes 93012, 93229, 93268, and 93271)

IV. Medicare Telehealth Services for the Physician Fee Schedule

A. Billing and Payment for Telehealth Services

1. History

2. Current Telehealth Billing and Payment Policies

B. Requests for Adding Services to the List of Medicare Telehealth Services

C. Submitted Requests for Addition to the List of Telehealth Services for CY 2011

(1) Individual KDE Services

(2) Individual DSMT Services

(3) Group KDE, MNT, DSMT, and HBAI Services

(4) Initial, Subsequent, and Discharge Day Management Hospital Care Services

(5) Initial, Subsequent, Discharge Day Management, and Other Nursing Facility Care Services

(6) Neuropsychological Testing Services

(7) Speech-Language Pathology Services

(8) Home Wound Care Services

D. Summary of CY 2011 Telehealth Proposals

V. Provisions of the Patient Protection and Affordable Care Act of 2010

A. Section 3002: Improvements to the Physician Quality Reporting System

B. Section 3003: Improvements to the Physician Feedback Program and Section 3007: Value-Based Payment Modifier Under the Physician Fee Schedule

1. Background

2. Effect of the Patient Protection and Affordable Care Act on the Program

3. Implementation of Sections 3003 and 3007 of the Affordable Care Act

4. Comments Sought on Specific Policy Topics Related to Both PPACA Sections 3003 and 3007

a. Risk Adjustment

b. Attribution

c. Benchmarking and Peer Groups

d. Cost and Quality Measures and Composite Measurement

C. Section 3102: Extension of the Work Geographic Index Floor and Revisions to the Practice Expense Geographic Adjustment Under the Medicare Physician Fee Schedule, and Protections for Frontier States as Amended by Section 10324 of the Affordable Care Act

D. Section 3103: Extension of Exceptions Process for Medicare Therapy Caps

E. Section 3104: Extension of Payment for Technical Component of Certain Physician Pathology Services

F. Section 3105: Extension of Ambulance Add-On

G. Section 3107: Extension of Physician Fee Schedule Mental Health Add-On

H. Section 3108: Permitting Physician Assistants to Order Post-Hospital Extended Care Services

I. Section 3111: Payment for Bone Density Tests

J. Section 3114: Improved Access for Certified Nurse Midwife Services

K. Section 3122: Extension of Medicare Reasonable Costs Payments for Certain Clinical Diagnostic Laboratory Tests Furnished to Hospital Patients in Certain Rural Areas

L. Section 3134: Misvalued Codes Under the Physician Fee Schedule

M. Section 3135: Modification of Equipment Utilization Factor for Advanced Imaging Services

1. Adjustment in Practice Expense to Reflect Higher Presumed Utilization

2. Adjustment in Technical Component “Discount” on Single-Session Imaging to Consecutive Body Parts

N. Section 3136: Revision for Payment for Power-Driven Wheelchairs

a. Payment Rules for Power Wheelchairs

b. Elimination of Lump Sum Payment for Standard Power Wheelchairs

c. Revision of Payment Amounts for Power Wheelchairs

O. Section 3139: Payment for Biosimilar Biological Products

P. Section 3401: Revision of Certain Market Basket Updates and Incorporation of Productivity Improvements Into Market Basket Updates That Do Not Already Incorporate Such Improvements

1. ESRD Market Basket Discussion

2. Productivity Adjustment Regarding Ambulance and Clinical Laboratory Fee Schedules

a. Ambulatory Surgery Centers (ASCs)

b. Ambulance Fee Schedule (AFS)

c. Clinical Lab Fee Schedule

Q. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a Personalized Prevention Plan

1. Background

a. Medicare Coverage of Preventive Physical Examinations and Routine Checkups

b. Requirements for Coverage of an Annual Wellness Visit

2. Proposed Revisions

a. Proposed Revisions to § 411.15, Particular Services Excluded From Coverage

b. Proposed Revisions to Part 410, Subpart B—Medical and Other Health Services

(1) Definitions

(2) Requirements of the First Visit for Personalized Prevention Plan Services

(3) Requirements of Subsequent Visits for Personalized Prevention Plan Services

3. Payment for the Annual Wellness Visit Providing Personalized Prevention Plan Services (PPPS)

R. Section 4104: Removal of Barriers to Preventive Services in Medicare

1. Definition of “Preventive Services”

2. Deductible and Coinsurance for Preventive Services

3. Extension of Waiver of Deductible to Services Furnished in Connection With or in Relation to a Colorectal Cancer Screening Test that Becomes Diagnostic or Therapeutic

S. Section 5501: Expanding Access to Primary Care Services and General Surgery Services

1. Section 5501(a): Incentive Payment Program for Primary Care Services

a. Background

b. Proposed Primary Care Incentive Payment Program (PCIP)

2. Section 5501(b): Incentive Payment Program for Major Surgical Procedures Furnished in Health Professional Shortage Areas

a. Background

b. Proposed HPSA Surgical Incentive Payment Program (HSIP)

3. Sections 5501(a) and (b) of the Affordable Care Act and Payment for Critical Access Hospital Professional Services Under the Optional Method

T. Section 6003: Disclosure Requirements for In-Office Ancillary Services Exception to the Prohibition on Physician Self-Referral for Certain Imaging Services

1. Background

2. Proposed Disclosure Requirement

U. Section 6404: Maximum Period for Submission of Medicare Claims Reduced to Not More Than 12 Months

1. Background

2. Provisions of Affordable Care Act

V. Section 6410 and MIPPA: Adjustments to the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Acquisition Program

1. Background

2. Subdividing Large MSAs Under Round 2

3. Exclusions of Certain Areas After Round 2 and Prior to 2015

4. Expansion of Round 2

W. Section 10501(i)(3)—Proposed Collection of HCPCS Data for Development and Implementation of a Prospective Payment System for the Medicare Federally Qualified Health Center Program

VI. Other Provisions of the Proposed Regulation

A. Part B Drug Payment: Average Sales Price (ASP) Issues

1. “Carry Over” ASP

2. Partial Quarter ASP Data

3. Determining the Payment Amount for Drugs and Biologicals Which Include Intentional Overfill

4. WAMP/AMP

5. Price Substitutions

a. AMP threshold

b. AMP Price Substitution

B. Ambulance Fee Schedule: Proposed Policy for Reporting Units When Billing for Ambulance Fractional Mileage

1. Policy for Reporting Units When Billing for Ambulance Fractional Mileage or Other Services

a. History of Medicare Ambulance Services

(1) Statutory Coverage of Ambulance Services

(2) Medicare Regulations for Ambulance Services

b. Mileage Reporting

(1) Background and Current Process for Reporting Ambulance Mileage

(2) Potential for Inaccuracies in Reporting Units and Associated Risks

(3) Billing of Fractional Units for Mileage

C. Clinical Laboratory Fee Schedule: Signature on Requisition

D. Discussion of Chiropractic Services Demonstration

E. Provisions Related to Payment for Renal Dialysis Services Furnished by End-Stage Renal Disease (ESRD) Facilities

1. CY 2005 Provisions

2. CY 2006 Provisions

3. CY 2007 Provisions

4. CY 2008 Provisions

5. CY 2009 Updates

6. CY 2010 Updates

7. Proposals for CY 2011

a. MIPPA Provisions

b. Affordable Care Act Provision

8. Proposed Update to the Drug Add-On Adjustment to the Composite Rate

a. Estimating Growth in Expenditures for Drugs and Biologicals for CY 2010

b. Estimating Growth in Expenditures for Drugs and Biologicals in CY 2011

c. Estimating Per Patient Growth

d. Applying the Proposed Growth Update to the Drug Add-On Adjustment

e. Proposed Update to the Drug Add-On Adjustment

f. Proposed Update to the Geographic Adjustments to the Composite Rate

g. Proposed Updates to Core-Based Statistical Area (CBSA) Definitions

h. Proposed Updated Wage Index Values

i. Reduction to the ESRD Wage Index Floor

j. Proposed Wage Index Values for Areas With No Hospital Data

k. Budget Neutrality Adjustment

l. ESRD Wage Index Tables

F. Issues Related to the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA)

1. Section 131: Physician Payment, Efficiency, and Quality Improvements— Physician Quality Reporting Initiative (PQRI)

a. Program Background and Statutory Authority

b. Incentive Payments for the 2011 PQRI

c. Proposed 2011 Reporting Periods for Individual Eligible Professionals

d. Proposed 2011 PQRI Reporting Mechanisms for Individual Eligible Professionals

(1) Proposed Requirements for Individual Eligible Professionals Who Choose the Claims-Based Reporting Mechanism

(2) Proposed Requirements for Individual Eligible Professionals Who Choose the Registry-Based Reporting Mechanism

(3) Proposed Requirements for Individual Eligible Professionals Who Choose the EHR-Based Reporting Mechanism

(4) Proposed Qualification Requirements for Registries

(5) Proposed Qualification Requirements for EHR Vendors and Their Products

e. Proposed Criteria for Satisfactory Reporting of Individual Quality Measures for Individual Eligible Professionals

f. Proposed Criteria for Satisfactory Reporting Measures Groups for Individual Eligible Professionals

g. Proposed Reporting Option for Satisfactory Reporting on Quality Measures by Group Practices

(1) Group Practice Reporting Option—GPRO I

(2) Process for Physician Group Practices to Participate as Group Practices and Criteria for Satisfactory Reporting

h. Statutory Requirements and Other Considerations for 2011 PQRI Measures

(1) Statutory Requirements for 2011 PQRI Measures

(2) Other Considerations for Measures Proposed for Inclusion in the 2011 PQRI

i. Proposed 2011 PQRI Quality Measures for Individual Eligible Professionals

(1) Proposed 2011 Individual Quality Measures Selected From the 2010 PQRI Quality Measures Set Available for Claims Based Reporting and Registry-Based Reporting

(2) Proposed 2011 Individual Quality Measures Selected From the 2010 PQRI Quality Measures Set Available for Registry Based Reporting Only

(3) New Individual Quality Measures Selected for Proposed for 2011

(4) Proposed 2011 Measures Available for EHR-Based Reporting

(5) Measures Proposed for Inclusion in 2011 Measures Groups

j. Proposed 2011 PQRI Quality Measures for Physician Groups Selected to Participate in the Group Practice Reporting Option

k. Public Reporting of PQRI Data

l. Affordable Care Act Extension of Incentive for PQRI Program

m. Affordable Care Act Timely Feedback Reports

n. Affordable Care Act Informal Appeals Process

o. Affordable Care Act Maintenance of Certification Program

p. Affordable Care Act Physician Compare Web Site

q. Affordable Care Act Integration of PQRI EHR Measures and HITECH Measures in Years After 2011

2. Section 132: Incentives for Electronic Prescribing (eRx)—The Electronic Prescribing Incentive Program

a. Program Background and Statutory Authority

b. The 2011 Reporting Period for the eRx Incentive Program

c. Proposed Criteria for Determination of Successful Electronic Prescriber for Eligible Professionals

(1) Reporting the Electronic Prescribing Measure

(2) The Reporting Denominator for the Electronic Prescribing Measure

(3) Qualified Electronic Prescribing System—Required Functionalities and Part D eRx Standards

(4) The Reporting Numerator for the Electronic Prescribing Measure

(5) Criteria for Successful Reporting of the Electronic Prescribing Measure

d. Determination of the 2011 Incentive Payment Amount for Individual Eligible Professionals Who Are Successful Electronic Prescribers

e. Proposed Reporting Option for Satisfactory Reporting of the Electronic Prescribing Measure by Group Practices

(1) Definition of “Group Practice”

(2) Process for Group Practices to Participate as Group Practices and Criteria for Successful Reporting of the Electronic Prescribing Measure by Group Practices

f. Public Reporting of Names of Successful Electronic Prescribers

G. DMEPOS Competitive Bidding Program Issues

1. Implementation of a National Mail Order Competitive Bidding Program for Diabetic Testing Supplies

a. Revision of the Definition of “Mail Order”

(1) Legislative and Regulatory History of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program

(2) National Mail Order Competitive Bidding Program

(3) The MIPPA and the Medicare DMEPOS Competitive Bidding Program

(4) Competition for Mail Order Diabetic Supplies Under Round 1 of the Medicare DMEPOS Competitive Bidding Program

b. Overview of Proposed Rule

c. Future Competitions for Diabetic Testing Supplies

d. Definition of Mail Order Item

e. Special Rule in Case of National Mail Order Competition for Diabetic Testing Strips

f. Anti-Switching Rule in Case of National Mail Order Competition for Diabetic Test Strips

2. Off-the-Shelf (OTS) Orthotics Exemption

3. Changes to Payment for Oxygen and Oxygen Equipment

a. Background

b. Furnishing Oxygen Equipment After the 36-Month Rental Period (Cap)

c. Furnishing Oxygen Equipment During the 36-Month Rental Period (Cap)

4. Grandfathering Rules Resulting in Extra Payments to Contract Suppliers Under the DMEPOS Competitive Bidding Program

5. Appeals Process

a. Background

b. Proposed Appeals Process

(1) Purpose and Definitions: (§ 414.402)

(2) Applicability

(3) Contract Termination

(4) Notice of Termination

(5) Corrective Action Plan

(6) Right to Request a Hearing by the CBIC Hearing Officer

(7) Scheduling of the Hearing

(8) Burden of Proof

(9) Role of the Hearing Officer

(10) CMS's Final Determination

(11) Effective Date of the Contract Termination

(12) Effect of Contract Termination

H. Provider and Supplier Enrollment Issue: Air Ambulance Provision

I. Technical Corrections

1. Physical Therapy, Occupational Therapy, and Speech-Language Pathology

2. Scope of Benefits

VII. Collection of Information Requirements

VIII. Response to Comments

IX. Regulatory Impact Analysis

A. RVU Impacts

1. Resource Based Work, PE, and Malpractice RVUs

2. CY 2011 PFS Impact Discussion

a. Changes in RVUs

b. Combined Impact

B. Geographic Practice Cost Indices (GPCIs)

C. Rebasing and Revising of the MEI

D. The Affordable Care Act Provisions

1. Section 3103: Extension of Exceptions Process for Medicare Therapy Caps

2. Section 3104: Extension of Payment for Technical Component of Certain Physician Pathology Services

3. Sections 3105 and 10311: Extension of Ambulance Add-Ons

4. Section 3107: Extension of Physician Fee Schedule Mental Health Add-On

5. Section 3111: Payment for Bone Density Tests

6. Section 3122: Extension of Medicare Reasonable Costs Payments for Certain Clinical Diagnostic Laboratory Tests Furnished to Hospital Patients in Certain Rural Areas

7. Section 3135: Modification of Equipment Utilization Factor for Advanced Imaging Services

8. Section 3136: Revisions in Payments for Power Wheelchairs

9. Section 3401: Revisions of Certain Market Basket Updates and Incorporation of Productivity Adjustments

10. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a Personalized Prevention Plan

11. Section 4104: Removal of Barriers to Preventive Services in Medicare

12. Section 5501: Expanding Access to Primary Care Services and General Surgery Services

13. Section 6003: Disclosure Requirements for In-Office Ancillary Services Exception to the Prohibition of Physician Self-referral for Certain Imaging Services

14. Section 6404: Maximum Period for Submission of Medicare Claims Reduced to Not More Than 12 Months

E. Other Provisions of the Proposed Regulation

1. Part B Drug Payment: ASP Issues

2. Ambulance Fee Schedule: Proposed Policy for Reporting Units When Billing for Ambulance Fractional Mileage

3. Chiropractic Services Demonstration

4. Renal Dialysis Services Furnished by ESRD Facilities

5. Section 131(b) of the MIPPA: Physician Payment, Efficiency, and Quality Improvements—Physician Quality Reporting Initiative (PQRI)

6. Section 132 of the MIPPA: Incentives for Electronic Prescribing (eRx)—The eRx Incentive Program

7 RHC/FQHC Issues

8. Durable Medical Equipment-Related Issues

a. Off-the-Shelf (OTS) Orthotics Exemption

b. Changes to Payment for Oxygen Equipment

F. Alternatives Considered

G. Impact on Beneficiaries

H. Accounting Statement

Regulation Text

Addendum A—Explanation and Use of Addendum B

Addendum B—Proposed Relative Value Units and Related Information Used in Determining Medicare Payments for CY 2011

Addendum C—[Reserved]

Addendum D—Proposed CY 2011 Geographic Adjustment Factors (GAFs)

Addendum E—Proposed CY 2011 Geographic Practice Cost Indices (GPCIs) by State and Medicare Locality

Addendum F—Proposed CY 2011 Diagnostic Imaging Services Subject to the Multiple Procedure Payment Reduction

Addendum G—CPT/HCPCS Imaging Codes Defined by Section 5102(b) of the DRA

Addendum H—Proposed CY 2011 “Always Therapy” Services* Subject to the Multiple Procedure Payment Reduction

Addendum I—[Reserved]

Addendum J—[Reserved]

Addendum K—Proposed CY 2011 ESRD Wage Index for Urban Areas Based on CBSA Labor Market Areas

Addendum L—Proposed CY 2011 ESRD Wage Index for Rural Areas Based on CBSA Labor Market Areas

Acronyms Back to Top

In addition, because of the many organizations and terms to which we refer by acronym in this proposed rule, we are listing these acronyms and their corresponding terms in alphabetical order below:

AAAnesthesiologist assistant

AACVPRAmerican Association of Cardiovascular and Pulmonary Rehabilitation

AANAAmerican Association of Nurse Anesthetists

ABMSAmerican Board of Medical Specialties

ABNAdvanced Beneficiary Notice

ACA“Affordable Care Act”

ACCAmerican College of Cardiology

ACGMEAccreditation Council on Graduate Medical Education

ACLSAdvanced cardiac life support

ACRAmerican College of Radiology

AEDAutomated external defibrillator

AFROCAssociation of Freestanding Radiation Oncology Centers

AHAAmerican Heart Association

AHFS-DIAmerican Hospital Formulary Service—Drug Information

AHRQ[HHS'] Agency for Healthcare Research and Quality

AMAAmerican Medical Association

AMA-DEAmerican Medical Association Drug Evaluations

AMPAverage manufacturer price

AOAccreditation organization

AOAAmerican Osteopathic Association

APAAmerican Psychological Association

APTAAmerican Physical Therapy Association

ARRAAmerican Recovery and Reinvestment Act (Pub. L. 111-5)

ASCAmbulatory surgical center

ASPAverage sales price

ASRTAmerican Society of Radiologic Technologists

ASTROAmerican Society for Therapeutic Radiology and Oncology

ATAAmerican Telemedicine Association

AWPAverage wholesale price

BBABalanced Budget Act of 1997 (Pub. L. 105-33)

BBRA[Medicare, Medicaid and State Child Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)

BIPAMedicare, Medicaid, and SCHIP Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)

BLSBasic Life support

BNBudget neutrality

BPMBenefit Policy Manual

CABGCoronary artery bypass graft

CADCoronary artery disease

CAHCritical access hospital

CAHEACommittee on Allied Health Education and Accreditation

CAPCompetitive acquisition program

CBICCompetitive Bidding Implementation Contractor

CBPCompetitive Bidding Program

CBSACore-Based Statistical Area

CFConversion factor

CfCConditions for Coverage

CFRCode of Federal Regulations

CKDChronic kidney disease

CLFSClinical laboratory fee schedule

CMACalifornia Medical Association

CMHCCommunity mental health center

CMPCivil money penalty

CMSCenters for Medicare & Medicaid Services

CNSClinical nurse specialist

CoPCondition of participation

COPDChronic obstructive pulmonary disease

CORFComprehensive Outpatient Rehabilitation Facility

COSCost of service

CPEPClinical Practice Expert Panel

CPIConsumer Price Index

CPI-UConsumer price index for urban customers

CPRCardiopulmonary resuscitation

CPT[Physicians'] Current Procedural Terminology (4th Edition, 2002, copyrighted by the American Medical Association)

CRCardiac rehabilitation

CRNACertified registered nurse anesthetist

CRPCanalith repositioning

CRTCertified respiratory therapist

CSWClinical social worker

CYCalendar year

DEADrug Enforcement Agency

DHSDesignated health services

DMEDurable medical equipment

DMEPOSDurable medical equipment, prosthetics, orthotics, and supplies

DOQDoctor's Office Quality

DOSDate of service

DRADeficit Reduction Act of 2005 (Pub. L. 109-171)

DSMTDiabetes self-management training

E/MEvaluation and management

EDIElectronic data interchange

EEGElectroencephalogram

EHRElectronic health record

EKGElectrocardiogram

EMGElectromyogram

EMTALAEmergency Medical Treatment and Active Labor Act

EOGElectro-oculogram

EPOErythopoeitin

ESRDEnd-stage renal disease

FAXFacsimile

FDAFood and Drug Administration (HHS)

FFSFee-for-service

FR Federal Register

GAFGeographic adjustment factor

GAOGeneral Accounting Office

GEMGenerating Medicare [Physician Quality Performance Measurement Results]

GFRGlomerular filtration rate

GPOGroup purchasing organization

GPCIGeographic practice cost index

HACHospital-acquired conditions

HBAIHealth and behavior assessment and intervention

HCPACHealth Care Professional Advisory Committee

HCPCSHealthcare Common Procedure Coding System

HCRISHealthcare Cost Report Information System

HDRTHigh dose radiation therapy

HH PPSHome Health Prospective Payment System

HHAHome health agency

HHRGHome health resource group

HHS[Department of] Health and Human Services

HIPAAHealth Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191)

HITHealth information technology

HITECHHealth Information Technology for Economic and Clinical Health Act (Title IV of Division B of the Recovery Act, together with Title XIII of Division A of the Recovery Act)

HITSPHealthcare Information Technology Standards Panel

HIVHuman immunodeficiency virus

HOPDHospital outpatient department

HPSAHealth Professional Shortage Area

HRSAHealth Resources Services Administration (HHS)

IACSIndividuals Access to CMS Systems

ICDInternational Classification of Diseases

ICFIntermediate care facilities

ICRIntensive cardiac rehabilitation

ICRInformation collection requirement

IDTFIndependent diagnostic testing facility

IFCInterim final rule with comment period

IMRTIntensity-Modulated Radiation Therapy

IPPEInitial preventive physical examination

IPPSInpatient prospective payment system

IRSInternal Revenue Service

ISOInsurance services office

IVDIschemic Vascular Disease

IVIGIntravenous immune globulin

IWPUTIntra-service work per unit of time

JRCERTJoint Review Committee on Education in Radiologic Technology

KDEKidney disease education

LCDLocal coverage determination

MAMedicare Advantage

MA-PDMedicare Advantage—Prescription Drug Plans

MAVMeasure Applicability Validation

MCMPMedicare Care Management Performance

MDRDModification of Diet in Renal Disease

MedCACMedicare Evidence Development and Coverage Advisory Committee (formerly the Medicare Coverage Advisory Committee (MCAC))

MedPACMedicare Payment Advisory Commission

MEIMedicare Economic Index

MIEA-TRHCAMedicare Improvements and Extension Act of 2006 (that is, Division B of the Tax Relief and Health Care Act of 2006 (TRHCA)) (Pub. L. 109-432)

MIPPAMedicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275)

MMAMedicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173)

MMSEAMedicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173)

MNTMedical nutrition therapy

MOCMaintenance of certification

MPMalpractice

MPPRMultiple procedure payment reduction

MQSAMammography Quality Standards Act of 1992 (102)

MRAMagnetic resonance angiography

MRIMagnetic resonance imaging

MSAMetropolitan statistical area

NBRCNational Board for Respiratory Care

NCDNational Coverage Determination

NCQDISNational Coalition of Quality Diagnostic Imaging Services

NDCNational drug code

NFNursing facility

NISTANational Institute of Standards and Technology Act

NPNurse practitioner

NPINational Provider Identifier

NPPNonphysician practitioner

NQFNational Quality Forum

NRCNuclear Regulatory Commission

OACT[CMS'] Office of the Actuary

OBRAOmnibus Budget Reconciliation Act

ODFOpen door forum

OGPEOxygen generating portable equipment

OIGOffice of Inspector General

OMBOffice of Management and Budget

ONC[HHS'] Office of the National Coordinator for Health IT

OPPSOutpatient prospective payment system

OSCAROnline Survey and Certification and Reporting

PAPhysician assistant

PATPerformance assessment tool

PCProfessional component

PCIPercutaneous coronary intervention

PDPPrescription drug plan

PEPractice expense

PE/HRPractice expense per hour

PEACPractice Expense Advisory Committee

PERCPractice Expense Review Committee

PFSPhysician Fee Schedule

PGP[Medicare] Physician Group Practice

PHIProtected health information

PHPPartial hospitalization program

PIM[Medicare] Program Integrity Manual

PLIProfessional liability insurance

POAPresent on admission

POCPlan of care

PPIProducer price index

PPISPhysician Practice Information Survey

PPSProspective payment system

PPTAPlasma Protein Therapeutics Association

PQRIPhysician Quality Reporting Initiative

PRPulmonary rehabilitation

PRAPaperwork Reduction Act

PSAPhysician scarcity areas

PTPhysical therapy

PTCAPercutaneous transluminal coronary angioplasty

PVBPPhysician and Other Health Professional Value-Based Purchasing Workgroup

RARadiology assistant

RBMARadiology Business Management Association

RFARegulatory Flexibility Act

RHCRural health clinic

RIARegulatory impact analysis

RNRegistered nurse

RNACReasonable net acquisition cost

RPARadiology practitioner assistant

RRTRegistered respiratory therapist

RUC[AMA's Specialty Society] Relative (Value) Update Committee

RVURelative value unit

SBASmall Business Administration

SGRSustainable growth rate

SLPSpeech-language pathology

SMS[AMA's] Socioeconomic Monitoring System

SNFSkilled nursing facility

SORSystem of record

SRSStereotactic radiosurgery

STARSServices Tracking and Reporting System

TCTechnical Component

TINTax identification number

TRHCATax Relief and Health Care Act of 2006 (Pub. L. 109-432)

TTOTranstracheal oxygen

UPMCUniversity of Pittsburgh Medical Center

USDEUnited States Department of Education

USP-DIUnited States Pharmacopoeia-Drug Information

VBPValue-based purchasing

WAMPWidely available market price

I. Background Back to Top

Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Social Security Act (the Act), “Payment for Physicians' Services.” The Act requires that payments under the physician fee schedule (PFS) are based on national uniform relative value units (RVUs) based on the relative resources used in furnishing a service. Section 1848(c) of the Act requires that national RVUs be established for physician work, practice expense (PE), and malpractice expense. Before the establishment of the resource-based relative value system, Medicare payment for physicians' services was based on reasonable charges. We note that throughout this proposed rule, unless otherwise noted, the term “practitioner” is used to describe both physicians and eligible nonphysician practitioners (such as physician assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives, psychologists, or social workers) that are permitted to furnish and bill Medicare under the PFS for the services under discussion.

A. Development of the Relative Value System

1. Work RVUs

The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (101), and OBRA 1990, (101). The final rule, published on November 25, 1991 (56 FR 59502), set forth the fee schedule for payment for physicians' services beginning January 1, 1992. Initially, only the physician work RVUs were resource-based, and the PE and malpractice RVUs were based on average allowable charges.

The physician work RVUs established for the implementation of the fee schedule in January 1992 were developed with extensive input from the physician community. A research team at the Harvard School of Public Health developed the original physician work RVUs for most codes in a cooperative agreement with the Department of Health and Human Services (DHHS). In constructing the code-specific vignettes for the original physician work RVUs, Harvard worked with panels of experts, both inside and outside the Federal government, and obtained input from numerous physician specialty groups.

Section 1848(b)(2)(B) of the Act specifies that the RVUs for anesthesia services are based on RVUs from a uniform relative value guide, with appropriate adjustment of the conversion factor (CF), in a manner to assure that fee schedule amounts for anesthesia services are consistent with those for other services of comparable value. We established a separate CF for anesthesia services, and we continue to utilize time units as a factor in determining payment for these services. As a result, there is a separate payment methodology for anesthesia services.

We establish physician work RVUs for new and revised codes based on our review of recommendations received from the American Medical Association's (AMA) Specialty Society Relative Value Update Committee (RUC).

2. Practice Expense Relative Value Units (PE RVUs)

Section 121 of the Social Security Act Amendments of 1994 (103), enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii) of the Act and required us to develop resource-based PE RVUs for each physician's service beginning in 1998. We were to consider general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising PEs.

Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay implementation of the resource-based PE RVU system until January 1, 1999. In addition, section 4505(b) of the BBA provided for a 4-year transition period from charge-based PE RVUs to resource-based RVUs.

We established the resource-based PE RVUs for each physicians' service in a final rule, published November 2, 1998 (63 FR 58814), effective for services furnished in 1999. Based on the requirement to transition to a resource-based system for PE over a 4-year period, resource-based PE RVUs did not become fully effective until 2002.

This resource-based system was based on two significant sources of actual PE data: the Clinical Practice Expert Panel (CPEP) data; and the AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were collected from panels of physicians, practice administrators, and nonphysicians (for example, registered nurses (RNs)) nominated by physician specialty societies and other groups. The CPEP panels identified the direct inputs required for each physician's service in both the office setting and out-of-office setting. We have since refined and revised these inputs based on recommendations from the RUC. The AMA's SMS data provided aggregate specialty-specific information on hours worked and PEs.

Separate PE RVUs are established for procedures that can be performed in both a nonfacility setting, such as a physician's office, and a facility setting, such as a hospital outpatient department. The difference between the facility and nonfacility RVUs reflects the fact that a facility typically receives separate payment from Medicare for its costs of providing the service, apart from payment under the PFS. The nonfacility RVUs reflect all of the direct and indirect PEs of providing a particular service.

Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) directed the Secretary of Health and Human Services (the Secretary) to establish a process under which we accept and use, to the maximum extent practicable and consistent with sound data practices, data collected or developed by entities and organizations to supplement the data we normally collect in determining the PE component. On May 3, 2000, we published the interim final rule (65 FR 25664) that set forth the criteria for the submission of these supplemental PE survey data. The criteria were modified in response to comments received, and published in the Federal Register (65 FR 65376) as part of a November 1, 2000 final rule. The PFS final rules published in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended the period during which we would accept these supplemental data through March 1, 2005.

In the calendar year (CY) 2007 PFS final rule with comment period (71 FR 69624), we revised the methodology for calculating direct PE RVUs from the top-down to the bottom-up methodology beginning in CY 2007 and provided for a 4-year transition for the new PE RVUs under this new methodology. This transition ended in CY 2010 and direct PE RVUs are calculated in CY 2011 using this methodology, unless otherwise noted.

In the CY 2010 PFS final rule with comment period, we updated the PE/hour (HR) data that are used in the calculation of PE RVUs for most specialties (74 FR 61749). For this update, we used the Physician Practice Information Survey (PPIS) conducted by the AMA. The PPIS is a multispecialty, nationally representative, PE survey of both physicians and nonphysician practitioners (NPPs) using a survey instrument and methods highly consistent with those of the SMS and the supplemental surveys used prior to CY 2010. We note that in CY 2010, for oncology, clinical laboratories, and independent diagnostic testing facilities (IDTFs), we continued to use the supplemental survey data to determine PE/HR values (74 FR 61752).

3. Resource-Based Malpractice (MP) RVUs

Section 4505(f) of the BBA amended section 1848(c) of the Act requiring us to implement resource-based malpractice (MP) RVUs for services furnished on or after 2000. The resource-based MP RVUs were implemented in the PFS final rule published November 2, 1999 (64 FR 59380). The MP RVUs were based on malpractice insurance premium data collected from commercial and physician-owned insurers from all the States, the District of Columbia, and Puerto Rico.

4. Refinements to the RVUs

Section 1848(c)(2)(B)(i) of the Act requires that we review all RVUs no less often than every 5 years. The first Five-Year Review of the physician work RVUs was published on November 22, 1996 (61 FR 59489) and was effective in 1997. The second Five-Year Review was published in the CY 2002 PFS final rule with comment period (66 FR 55246) and was effective in 2002. The third Five-Year Review of physician work RVUs was published in the CY 2007 PFS final rule with comment period (71 FR 69624) and was effective on January 1, 2007. (Note: Additional codes relating to the third Five-Year Review of physician work RVUs were addressed in the CY 2008 PFS final rule with comment period (72 FR 66360).) The fourth Five-Year Review of physician work RVUs was initiated in the CY 2010 PFS final rule with comment period where we solicited candidate codes from the public for this review (74 FR 61941). Changes due to the fourth Five-Year Review of physician work RVUs will be effective January 1, 2012.

In 1999, the AMA's RUC established the Practice Expense Advisory Committee (PEAC) for the purpose of refining the direct PE inputs. Through March 2004, the PEAC provided recommendations to CMS for over 7,600 codes (all but a few hundred of the codes currently listed in the AMA's Current Procedural Terminology (CPT) codes). As part of the CY 2007 PFS final rule with comment period (71 FR 69624), we implemented a new bottom-up methodology for determining resource-based PE RVUs and transitioned the new methodology over a 4-year period. A comprehensive review of PE was undertaken prior to the 4-year transition period for the new PE methodology from the top-down to the bottom-up methodology, and this transition was completed in CY 2010. In CY 2010, we also incorporated the new PPIS data to update the specialty-specific PE/HR data used to develop PE RVUs. Therefore, the next Five-Year Review of PE RVUs will be addressed in CY 2014.

In the CY 2005 PFS final rule with comment period (69 FR 66236), we implemented the first Five-Year Review of the MP RVUs (69 FR 66263). Minor modifications to the methodology were addressed in the CY 2006 PFS final rule with comment period (70 FR 70153). The second Five-Year Review and update of resource-based malpractice RVUs was published in the CY 2010 PFS final rule with comment period (74 FR 61758) and was effective in CY 2010.

5. Adjustments to RVUs Are Budget Neutral

Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in RVUs for a year may not cause total PFS payments to differ by more than $20 million from what they would have been if the adjustments were not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if revisions to the RVUs cause expenditures to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million.

As explained in the CY 2009 PFS final rule with comment period (73FR 69730), as required by section 133(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), the separate budget neutrality (BN) adjustor resulting from the third Five-Year Review of physician work RVUs is being applied to the CF beginning in CY 2009 rather than to the work RVUs.

For CY 2010, we adopted a number of new payment policies for which we estimated the potential for a redistributive effect under the PFS, including the use of the new PPIS data to develop the specialty-specific PE/HR used for the PE RVUs (74 FR 61749 through 61752) and the elimination of the reporting of all CPT consultation codes in order to allow for correct and consistent coding and appropriate payment for evaluation and management services under the PFS (74 FR 61767 through 61775). We recognize that clinical experience with these new PFS policies has been growing over the first 6 months of CY 2010 and, as we seek to improve future PFS payment accuracy for services, we are interested in public comments on the perspectives of physicians and nonphysician practitioners caring for Medicare beneficiaries under the current PFS coding and payment methodologies for physicians' services.

B. Components of the Fee Schedule Payment Amounts

To calculate the payment for every physicians' service, the components of the fee schedule (physician work, PE, and MP RVUs) are adjusted by a geographic practice cost index (GPCI). The GPCIs reflect the relative costs of physician work, PE, and malpractice expense in an area compared to the national average costs for each component.

RVUs are converted to dollar amounts through the application of a CF, which is calculated by CMS' Office of the Actuary (OACT).

The formula for calculating the Medicare fee schedule payment amount for a given service and fee schedule area can be expressed as:

Payment = [(RVU work × GPCI work) + (RVU PE × GPCI PE) + (RVU malpractice × GPCI malpractice)] × CF

C. Most Recent Changes to the Fee Schedule

The CY 2010 PFS final rule with comment period (74 FR 61738) implemented changes to the PFS and other Medicare Part B payment policies. It also finalized some of the CY 2009 interim RVUs and implemented interim RVUs for new and revised codes for CY 2010 to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. The CY 2010 PFS final rule with comment period also addressed other policies, as well as certain provisions of the MIPPA.

As required by the statute at the time of its issuance on October 30, 2009, the CY 2010 PFS final rule with comment period announced the following for CY 2010: The PFS update of −21.2 percent; the initial estimate for the sustainable growth rate of −8.8 percent; and the CF of $28.4061.

On December 10, 2009, we published a correction notice (74 FR 65449) to correct several technical and typographical errors that occurred in the CY 2010 PFS final rule with comment period. This correction notice announced a revised CF for CY 2010 of $28.3895.

On December 19, 2009, the Department of Defense Appropriations Act, 2010 (Pub. L. 111-118) was signed into law. Section 1011 of Pub. L. 111-118 provided a 2-month zero percent update to the CY 2010 PFS effective only for dates of service from January 1, 2010 through February 28, 2010.

On March 2, 2010, the Temporary Extension Act of 2010 (Pub. L. 111-144) was signed into law. Section 2 of Pub. L. 111-144 extended the zero percent update to the PFS through March 31, 2010 that was in effect for claims with dates of service from January 1, 2010 through February 28, 2010.

In addition, on April 15, 2010, the Continuing Extension Act of 2010 (Pub. L. 111-157) was signed into law. Section 4 of Public Law 111-157 extended through May 31, 2010 the zero percent update to the PFS that was in effect for claims with dates of services from January 1, 2010 through March 31, 2010. The law is retroactive to April 1, 2010.

In the May 11, 2010 Federal Register (75 FR 26350), we published a subsequent correction notice to correct several technical and typographical errors that occurred in the CY 2010 PFS final rule with comment period and the December 10, 2009 correction notice. The May 11, 2010 correction notice announced a revised CF for CY 2010 of $28.3895.

Finally, on March 23, 2010 the Patient Protection and Affordable Care Act (Pub. L. 111-148) was signed into law. Shortly thereafter, on March 30, 2010, the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) was signed into law. These two laws are discussed in this proposed rule and are collectively referred to as the “Affordable Care Act” (ACA) throughout this proposed rule.

II. Provisions of the Proposed Rule for the Physician Fee Schedule Back to Top

A. Resource-Based Practice Expense (PE) Relative Value Units (RVUs)

1. Overview

Practice expense (PE) is the portion of the resources used in furnishing the service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages but excluding malpractice expenses, as specified in section 1848(c)(1)(B) of the Act. Section 121 of the Social Security Amendments of 1994 (103), enacted on October 31, 1994, required CMS to develop a methodology for a resource-based system for determining PE RVUs for each physician's service. We develop PE RVUs by looking at the direct and indirect physician practice resources involved in furnishing each service. Direct expense categories include clinical labor, medical supplies and medical equipment. Indirect expenses include administrative labor, office expense, and all other expenses. The sections that follow provide more detailed information about the methodology for translating the resources involved in furnishing each service into service-specific PE RVUs. In addition, we note that section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in RVUs for a year may not cause total PFS payments to differ by more than $20 million from what they would have been if the adjustments were not made. Therefore, if revisions to the RVUs cause expenditures to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million. We refer readers to the CY 2010 PFS final rule with comment period (74 FR 61743 through 61748) for a more detailed history of the PE methodology.

2. Practice Expense Methodology

a. Direct Practice Expense

We use a bottom-up approach to determine the direct PE by adding the costs of the resources (that is, the clinical staff, equipment, and supplies) typically required to provide each service. The costs of the resources are calculated using the refined direct PE inputs assigned to each CPT code in our PE database, which are based on our review of recommendations received from the American Medical Association's (AMA's) Relative Value Update Committee (RUC). For a detailed explanation of the bottom-up direct PE methodology, including examples, we refer readers to the Five-Year Review of Work Relative Value Units Under the PFS and Proposed Changes to the Practice Expense Methodology proposed notice (71 FR 37242) and the CY 2007 PFS final rule with comment period (71 FR 69629).

b. Indirect Practice Expense per Hour Data

We use survey data on indirect practice expenses incurred per hour worked (PE/HR) in developing the indirect portion of the PE RVUs. Prior to CY 2010, we primarily used the practice expense per hour (PE/HR) by specialty that was obtained from the AMA's Socioeconomic Monitoring Surveys (SMS). These surveys were conducted from 1995 through 1999. For several specialties that collected additional PE/HR data through supplemental surveys, we incorporated these data in developing the PE/HR values used annually.

While the SMS was not specifically designed for the purpose of establishing PE RVUs, we found these data to be the best available at the time. The SMS was a multispecialty survey effort conducted using a consistent survey instrument and method across specialties. The survey sample was randomly drawn from the AMA Physician Masterfile to ensure national representativeness. The AMA discontinued the SMS survey in 1999. As required by the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), we also established a process by which specialty groups could submit supplemental PE data. In the May 3, 2000 Federal Register, we issued the Medicare Program; Criteria for Submitting Supplemental Practice Expense Survey Data interim final rule (65 FR 25664) in which we established criteria for acceptance of supplemental data. The criteria were modified in the CY 2001 and CY 2003 PFS final rules with comment period (65 FR 65380 and 67 FR 79971, respectively). In addition to the SMS, we previously used supplemental survey data for the following specialties: Cardiology; dermatology; gastroenterology; radiology; cardiothoracic surgery; vascular surgery; physical and occupational therapy; independent laboratories; allergy/immunology; independent diagnostic testing facilities (IDTFs); radiation oncology; medical oncology; and urology.

Because the SMS data and the supplemental survey data were from different time periods, we historically inflated them by the Medicare Economic Index (MEI) to put them on as comparable a time basis as we could when calculating the PE RVUs. This MEI proxy was necessary in the past due to the lack of contemporaneous, consistently collected, and comprehensive multispecialty survey data.

The AMA administered a new survey in CY 2007 and CY 2008, the Physician Practice Expense Information Survey (PPIS), which was expanded (relative to the SMS) to include nonphysician practitioners (NPPs) paid under the PFS. The PPIS was designed to update the specialty-specific PE/HR data used to develop PE RVUs. The AMA and the CMS contractor, The Lewin Group (Lewin), analyzed the PPIS data and calculated the PE/HR for physician and nonphysician specialties, respectively. The AMA's summary worksheets and Lewin's final report are available on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/PFSFRN/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=4&sortOrder=descending&itemID=CMS1223902&intNumPerPage=10. (See downloads labeled AMA PPIS Worksheets 1-3 and Physician Practice Expense non MDDO Final Report)

The PPIS is a multispecialty, nationally representative, PE survey of both physicians and NPPs using a consistent survey instrument and methods highly consistent with those used for the SMS and the supplemental surveys. The PPIS gathered information from 3,656 respondents across 51 physician specialty and healthcare professional groups.

We believe the PPIS is the most comprehensive source of PE survey information available to date. Therefore, we used the PPIS data to update the PE/HR data for almost all of the Medicare-recognized specialties that participated in the survey for the CY 2010 PFS. When we changed over to the PPIS data beginning in CY 2010, we did not change the PE RVU methodology itself or the manner in which the PE/HR data are used in that methodology. We only updated the PE/HR data based on the new survey. Furthermore, as we explained in the CY 2010 PFS final rule with comment period (74 FR 61751), because of the magnitude of payment reductions for some specialties resulting from the use of the PPIS data, we finalized a 4-year transition (75/25 for CY 2010, 50/50 for CY 2011, 25/75 for CY 2012, and 0/100 for CY 2013) from the previous PE RVUs to the PE RVUs developed using the new PPIS data.

Section 303 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) added section 1848(c)(2)(H)(i) of the Act, which requires us to use the medical oncology supplemental survey data submitted in 2003 for oncology drug administration services. Therefore, the PE/HR for medical oncology, hematology, and hematology/oncology reflects the continued use of these supplemental survey data.

We do not use the PPIS data for reproductive endocrinology, sleep medicine, and spine surgery since these specialties are not separately recognized by Medicare, and we do not know how to blend these data with Medicare-recognized specialty data.

Supplemental survey data on independent labs, from the College of American Pathologists, were implemented for payments in CY 2005. Supplemental survey data from the National Coalition of Quality Diagnostic Imaging Services (NCQDIS), representing IDTFs, were blended with supplementary survey data from the American College of Radiology (ACR) and implemented for payments in CY 2007. Neither IDTFs nor independent labs participated in the PPIS. Therefore, we continue to use the PE/HR that was developed from their supplemental survey data.

Finally, consistent with our past practice, the previous indirect PE/HR values from the supplemental surveys for medical oncology, independent laboratories, and IDTFs were updated to CY 2006 using the MEI to put them on a comparable basis with the PPIS data. In the CY 2010 PFS final rule with comment period (74 FR 61753), we miscalculated the indirect PE/HR for IDTFs as part of this update process. Therefore, for CY 2011, we are proposing to use a revised indirect PE/HR of $479.81 for IDTFs, consistent with our final policy to update the indirect PE/HR values from prior supplemental survey data that we are continuing to use in order to put these data on a comparable basis with the PPIS data. This revision changes the IDTF indirect percentage from 51 percent to 50 percent.

Previously, CMS has established PE/HR values for various specialties without SMS or supplemental survey data by crosswalking them to other similar specialties to estimate a proxy PE/HR. For specialties that were part of the PPIS for which we previously used a crosswalked PE/HR, we instead use the PPIS-based PE/HR. We continue previous crosswalks for specialties that did not participate in the PPIS. However, beginning in CY 2010 we changed the PE/HR crosswalk for portable x-ray suppliers from radiology to IDTF, a more appropriate crosswalk because these specialties are more similar to each other with respect to physician time.

In the CY 2010 PFS final rule with comment period (74 FR 61752), we agreed that, under the current PE methodology, the PPIS data for registered dieticians should not be used in the calculation of PE RVUs since these dieticians are paid 85 percent of what a physician would be paid for providing the service. To include their survey data in the PE calculation would influence the ratesetting by incorporating what the services would be paid if performed by registered dieticians and not strictly what the payment rates would be if provided by physicians. We further stated that we would utilize the “All Physicians” PE/HR, as derived from the PPIS, in the calculation of resource-based PE RVUs in lieu of the PE/HR associated with registered dieticians. In the resource-based PE methodology for CY 2010, while we removed the specialty of registered dieticians from the ratesetting step we did not assign the “All Physicians” PE/HR to services furnished by registered dieticians. Instead, we allowed the PE/HR for those services to be generated by a weighted average of all the physician specialties that also furnished the services. This method was consistent with our policy to not use the registered dietician PPIS PE/HR in calculating the PE RVUs for services furnished by registered dieticians but we did not actually crosswalk the specialty of registered dietician to the “All Physicians” PE/HR data as we had intended according to the final policy. Nevertheless, we are affirming for CY 2011 that the proposed resource-based PE RVUs have been calculated in accordance with the final policy adopted in the CY 2010 PFS final rule with comment period (74 FR 61752) for registered dietician services that crosswalks the specialty to the “All Physicians” PE/HR data.

As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), CY 2011 is the second year of the 4-year transition to the PE RVUs calculated using the PPIS data. Therefore, in general, the CY 2011 PE RVUs are a 50/50 blend of the previous PE RVUs based on the SMS and supplemental survey data and the new PE RVUS developed using the PPIS data as described above. Note that the reductions in the PE RVUs for expensive diagnostic imaging equipment attributable to the change to an equipment utilization rate assumption of 75 percent (see 74 FR 61753 through 61755 and section II.A.3. of this proposed rule) are not subject to the transition.

c. Allocation of PE to Services

To establish PE RVUs for specific services, it is necessary to establish the direct and indirect PE associated with each service.

(i) Direct costs. The relative relationship between the direct cost portions of the PE RVUs for any two services is determined by the relative relationship between the sum of the direct cost resources (that is, the clinical staff, equipment, and supplies) typically required to provide the services. The costs of these resources are calculated from the refined direct PE inputs in our PE database. For example, if one service has a direct cost sum of $400 from our PE database and another service has a direct cost sum of $200, the direct portion of the PE RVUs of the first service would be twice as much as the direct portion of the PE RVUs for the second service.

(ii) Indirect costs. Section II.A.2.b. of this proposed rule describes the current data sources for specialty-specific indirect costs used in our PE calculations. We allocate the indirect costs to the code level on the basis of the direct costs specifically associated with a code and the greater of either the clinical labor costs or the physician work RVUs. We also incorporate the survey data described earlier in the PE/HR discussion. The general approach to developing the indirect portion of the PE RVUs is described below.

  • For a given service, we use the direct portion of the PE RVUs calculated as described above and the average percentage that direct costs represent of total costs (based on survey data) across the specialties that perform the service to determine an initial indirect allocator. For example, if the direct portion of the PE RVUs for a given service were 2.00 and direct costs, on average, represented 25 percent of total costs for the specialties that performed the service, the initial indirect allocator would be 6.00 since 2.00 is 25 percent of 8.00.
  • We then add the greater of the work RVUs or clinical labor portion of the direct portion of the PE RVUs to this initial indirect allocator. In our example, if this service had work RVUs of 4.00 and the clinical labor portion of the direct PE RVUs was 1.50, we would add 6.00 plus 4.00 (since the 4.00 work RVUs are greater than the 1.50 clinical labor portion) to get an indirect allocator of 10.00. In the absence of any further use of the survey data, the relative relationship between the indirect cost portions of the PE RVUs for any two services would be determined by the relative relationship between these indirect cost allocators. For example, if one service had an indirect cost allocator of 10.00 and another service had an indirect cost allocator of 5.00, the indirect portion of the PE RVUs of the first service would be twice as great as the indirect portion of the PE RVUs for the second service.
  • We next incorporate the specialty-specific indirect PE/HR data into the calculation. As a relatively extreme example for the sake of simplicity, assume in our example above that, based on the survey data, the average indirect cost of the specialties performing the first service with an allocator of 10.00 was half of the average indirect cost of the specialties performing the second service with an indirect allocator of 5.00. In this case, the indirect portion of the PE RVUs of the first service would be equal to that of the second service.

d. Facility and Nonfacility Costs

For procedures that can be furnished in a physician's office, as well as in a hospital or facility setting, we establish two PE RVUs: facility and nonfacility. The methodology for calculating PE RVUs is the same for both the facility and nonfacility RVUs, but is applied independently to yield two separate PE RVUs. Because Medicare makes a separate payment to the facility for its costs of furnishing a service, the facility PE RVUs are generally lower than the nonfacility PE RVUs.

e. Services With Technical Components (TCs) and Professional Components (PCs)

Diagnostic services are generally comprised of two components: a professional component (PC) and a technical component (TC), each of which may be performed independently or by different providers, or they may be performed together as a “global” service. When services have PC and TC components that can be billed separately, the payment for the global component equals the sum of the payment for the TC and PC. This is a result of using a weighted average of the ratio of indirect to direct costs across all the specialties that furnish the global components, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expenses to the global components, PCs, and TCs for a service. (The direct PE RVUs for the TC and PC sum to the global under the bottom-up methodology.)

f. Alternative Data Sources and Public Comments on Final Rule for 2010.

In the CY 2010 PFS final rule with comment period (74 FR 61749 through 61750), we discussed the Medicare Payment Advisory Commission's (MedPAC's) comment that in the future, “CMS should consider alternatives to collecting specialty-specific cost data or options to decrease the reliance on such data.” We agreed with MedPAC that it would be appropriate to consider the future of the PE RVUs moving forward. We sought comments from other stakeholders on the issues raised by MedPAC for the future. In particular, we requested public comments regarding MedPAC's suggestion that we consider alternatives for collecting specialty-specific cost data or options to decrease the reliance on such data. We noted MedPAC's comment that, “CMS should consider if Medicare or provider groups should sponsor future data collection efforts, if participation should be voluntary (such as surveys) or mandatory (such as cost reports), and whether a nationally representative sample of practitioners would be sufficient for either a survey or cost reports.” MedPAC also stated that one option for decreasing the reliance on specialty-specific cost data would be the elimination of the use of indirect PE/HR data in the last step of establishing the indirect cost portion of the PE RVUs as described previously.

Almost all of the commenters on the CY 2010 PFS final rule with comment period that addressed this issue expressed a general willingness to work with CMS on methodological improvements or future data collection efforts. Although no commenters detailed a comprehensive overall alternative methodology, several commenters did provide suggestions regarding future data collection efforts and specific aspects of the current methodology.

The commenters that addressed the issue of surveys supported the use of surveys if they yielded accurate PE information. The few commenters that addressed the issue of cost reports were opposed to physician cost reports. The commenters varied with respect to their opinions regarding whether data collection efforts should be led by organized medicine, individual specialty societies, or CMS. Several commenters that addressed the issue of voluntary versus mandatory data collection efforts supported voluntary data collection efforts and opposed mandatory data collection efforts.

Some commenters recommended no changes to the methodology or PE data in the near future. Other commenters indicated that the methodology and data changes needed to be made for CY 2011. Although most commenters did not directly address the use of the indirect PE/HR data, those that did predominately opposed the elimination of the use of these data.

Many commenters addressed specifics of the PE methodology (as further described in section II.A.2.c. of this proposed rule). Some were opposed to the scaling factor applied in the development of the direct PE portion of the PE RVUs so that in the aggregate the direct portion of the PE RVUs do not exceed the proportion indicated by the survey data (See Step 4 in g.(ii) below). Several of these commenters advocated the elimination of this direct scaling factor, while others indicated that the issue should be examined more closely.

A few commenters recommended that physician work not be used as an allocator in the development of the indirect portion of the PE RVUs as described earlier in this section. A few indicated that physician time, but not physician work, should be used in the allocation. Other commenters suggested that indirect costs should be allocated solely on the basis of direct costs.

We note that many of the issues raised by commenters on the CY 2010 PFS final rule with comment period are similar to issues raised in the development of the original resource-based PE methodology and in subsequent revisions to the methodology, including the adoption of the bottom-up methodology. While we are not proposing a broad methodological change or broad data collection effort in this CY 2011 PFS proposed rule, we invite comments on our summary of the issues raised by the commenters on the CY 2010 PFS final rule with comment period, as presented above. The complete public comments on that final rule are available for public review at http://www.regulations.gov by entering “CMS-1413-FC” in the search box on the main page.

g. PE RVU Methodology

For a more detailed description of the PE RVU methodology, we refer readers to the CY 2010 PFS final rule with comment period (74 FR 61745 through 61746).

(i) Setup File

First, we create a setup file for the PE methodology. The setup file contains the direct cost inputs, the utilization for each procedure code at the specialty and facility/nonfacility place of service level, and the specialty-specific PE/HR data from the surveys.

(ii) Calculate the Direct Cost PE RVUs

Sum the costs of each direct input.

Step 1: Sum the direct costs of the inputs for each service. Apply a scaling adjustment to the direct inputs.

Step 2: Calculate the current aggregate pool of direct PE costs. This is the product of the current aggregate PE (aggregate direct and indirect) RVUs, the CF, and the average direct PE percentage from the survey data.

Step 3: Calculate the aggregate pool of direct costs. This is the sum of the product of the direct costs for each service from Step 1 and the utilization data for that service.

Step 4: Using the results of Step 2 and Step 3 calculate a direct PE scaling adjustment so that the aggregate direct cost pool does not exceed the current aggregate direct cost pool and apply it to the direct costs from Step 1 for each service.

Step 5: Convert the results of Step 4 to an RVU scale for each service. To do this, divide the results of Step 4 by the CF. Note that the actual value of the CF used in this calculation does not influence the final direct cost PE RVUs, as long as the same CF is used in Step 2 and Step 5. Different CFs will result in different direct PE scaling factors, but this has no effect on the final direct cost PE RVUs since changes in the CFs and changes in the associated direct scaling factors offset one another.

(iii) Create the Indirect Cost PE RVUs

Create indirect allocators.

Step 6: Based on the survey data, calculate direct and indirect PE percentages for each physician specialty.

Step 7: Calculate direct and indirect PE percentages at the service level by taking a weighted average of the results of Step 6 for the specialties that furnish the service. Note that for services with TCs and PCs, the direct and indirect percentages for a given service do not vary by the PC, TC, and global components.

Step 8: Calculate the service level allocators for the indirect PEs based on the percentages calculated in Step 7. The indirect PEs are allocated based on the three components: the direct PE RVUs, the clinical PE RVUs, and the work RVUs.

For most services the indirect allocator is:

indirect percentage * (direct PE RVUs/direct percentage) + work RVUs.

There are two situations where this formula is modified:

  • If the service is a global service (that is, a service with global, professional, and technical components), then the indirect allocator is: indirect percentage * (direct PE RVUs/direct percentage) + clinical PE RVUs + work RVUs.
  • If the clinical labor PE RVUs exceed the work RVUs (and the service is not a global service), then the indirect allocator is: indirect percentage * (direct PE RVUs/direct percentage) + clinical PE RVUs.

(Note: For global services, the indirect allocator is based on both the work RVUs and the clinical labor PE RVUs. We do this to recognize that, for the PC service, indirect PEs will be allocated using the work RVUs, and for the TC service, indirect PEs will be allocated using the direct PE RVUs and the clinical labor PE RVUs. This also allows the global component RVUs to equal the sum of the PC and TC RVUs.)

For presentation purposes in the examples in the Table 2, the formulas were divided into two parts for each service. The first part does not vary by service and is the: indirect percentage * (direct PE RVUs/direct percentage). The second part is either the work RVUs, clinical PE RVUs, or both depending on whether the service is a global service and whether the clinical PE RVUs exceed the work RVUs (as described earlier in this step).

Apply a scaling adjustment to the indirect allocators.

Step 9: Calculate the current aggregate pool of indirect PE RVUs by multiplying the current aggregate pool of PE RVUs by the average indirect PE percentage from the survey data.

Step 10: Calculate an aggregate pool of indirect PE RVUs for all PFS services by adding the product of the indirect PE allocators for a service from Step 8 and the utilization data for that service.

Step 11: Using the results of Step 9 and Step 10, calculate an indirect PE adjustment so that the aggregate indirect allocation does not exceed the available aggregate indirect PE RVUs and apply it to indirect allocators calculated in Step 8.

Calculate the indirect practice cost index.

Step 12: Using the results of Step 11, calculate aggregate pools of specialty-specific adjusted indirect PE allocators for all PFS services for a specialty by adding the product of the adjusted indirect PE allocator for each service and the utilization data for that service.

Step 13: Using the specialty-specific indirect PE/HR data, calculate specialty-specific aggregate pools of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service across all services performed by the specialty.

Step 14: Using the results of Step 12 and Step 13, calculate the specialty-specific indirect PE scaling factors.

Step 15: Using the results of Step 14, calculate an indirect practice cost index at the specialty level by dividing each specialty-specific indirect scaling factor by the average indirect scaling factor for the entire PFS.

Step 16: Calculate the indirect practice cost index at the service level to ensure the capture of all indirect costs. Calculate a weighted average of the practice cost index values for the specialties that furnish the service. (Note: For services with TCs and PCs, we calculate the indirect practice cost index across the global components, PCs, and TCs. Under this method, the indirect practice cost index for a given service (for example, echocardiogram) does not vary by the PC, TC, and global component.)

Step 17: Apply the service level indirect practice cost index calculated in Step 16 to the service level adjusted indirect allocators calculated in Step 11 to get the indirect PE RVUs.

(iv) Calculate the Final PE RVUs

Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs from Step 17 and apply the final PE budget neutrality (BN) adjustment, MEI rebasing adjustment, and multiple procedure payment reduction (MPPR) adjustment.

The final PE BN adjustment is calculated by comparing the results of Step 18 (prior to the MEI rebasing and MPPR adjustments) to the current pool of PE RVUs. This final BN adjustment is required primarily because certain specialties are excluded from the PE RVU calculation for ratesetting purposes, but all specialties are included for purposes of calculating the final BN adjustment. (See“Specialties excluded from ratesetting calculation” below in this section.)

As discussed in section II.E.1. of this proposed rule, we are proposing to rebase and revise the Medicare Economic Index (MEI) for CY 2011. As discussed in section II.C.4. of this proposed rule, section 1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) specifies that the Secretary shall identify potentially misvalued codes by examining multiple codes that are frequently billed in conjunction with furnishing a single service. There is inherent duplication in the PE associated with those services which are frequently furnished together, so reducing PFS payment for the second and subsequent services to account for the efficiencies in multiple service sessions may be appropriate. Consistent with this provision of the ACA, we are proposing a limited expansion of the current MPPR policy for imaging services for CY 2011 and a new MPPR policy for therapy services.

(v) Setup File Information

  • Specialties excluded from ratesetting calculation: For the purposes of calculating the PE RVUs, we exclude certain specialties, such as certain nonphysician practitioners paid at a percentage of the PFS and low volume specialties, from the calculation. These specialties are included for the purposes of calculating the BN adjustment. They are displayed in Table 1.
Table 1—Specialties Excluded From Ratesetting Calculation Back to Top
Specialty code Specialty description
42 Certified nurse midwife.
49 Ambulatory surgical center.
50 Nurse practitioner.
51 Medical supply company with certified orthotist.
52 Medical supply company with certified prosthetist.
53 Medical supply company with certified prosthetist-orthotist.
54 Medical supply company not included in 51, 52, or 53.
55 Individual certified orthotist.
56 Individual certified prosthetist.
57 Individual certified prosthetist-orthotist.
58 Individuals not included in 55, 56, or 57.
59 Ambulance service supplier, e.g., private ambulance companies, funeral homes, etc.
60 Public health or welfare agencies.
61 Voluntary health or charitable agencies.
73 Mass immunization roster biller.
74 Radiation therapy centers.
87 All other suppliers (e.g., drug and department stores).
88 Unknown supplier/provider specialty.
89 Certified clinical nurse specialist.
95 Competitive Acquisition Program (CAP) Vendor.
96 Optician.
A0 Hospital.
A1 SNF.
A2 Intermediate care nursing facility.
A3 Nursing facility, other.
A4 HHA.
A5 Pharmacy.
A6 Medical supply company with respiratory therapist.
A7 Department store.
1 Supplier of oxygen and/or oxygen related equipment.
2 Pedorthic personnel.
3 Medical supply company with pedorthic personnel.
  • Crosswalk certain low volume physician specialties: Crosswalk the utilization of certain specialties with relatively low PFS utilization to the associated specialties.
  • Physical therapy utilization: Crosswalk the utilization associated with all physical therapy services to the specialty of physical therapy.
  • Identify professional and technical services not identified under the usual TC and 26 modifiers: Flag the services that are PC and TC services, but do not use TC and 26 modifiers (for example, electrocardiograms). This flag associates the PC and TC with the associated global code for use in creating the indirect PE RVUs. For example, the professional service, CPT code 93010 (Electrocardiogram, routine ECG with at least 12 leads; interpretation and report only), is associated with the global service, CPT code 93000 (Electrocardiogram, routine ECG with at least 12 leads; with interpretation and report).
  • Payment modifiers: Payment modifiers are accounted for in the creation of the file. For example, services billed with the assistant at surgery modifier are paid 16 percent of the PFS amount for that service; therefore, the utilization file is modified to only account for 16 percent of any service that contains the assistant at surgery modifier.
  • Work RVUs: The setup file contains the work RVUs from this proposed rule.

(vi) Equipment Cost per Minute

The equipment cost per minute is calculated as:

(1/(minutes per year * usage)) * price * ((interest rate/(1 ^ (1/((1 + interest rate) * life of equipment)))) + maintenance)

Where:

minutes per year = maximum minutes per year if usage were continuous (that is, usage = 1); generally 150,000 minutes.

usage = equipment utilization assumption; 0.75 for certain expensive diagnostic imaging equipment (see 74 FR 61753 through 61755 and section II.A.3. of this proposed rule) and 0.5 for others.

price = price of the particular piece of equipment.

interest rate = 0.11.

life of equipment = useful life of the particular piece of equipment.

maintenance = factor for maintenance; 0.05.

Note:

The use of any particular conversion factor (CF) in Table 2 to illustrate the PE calculation has no effect on the resulting RVUs.

Table 2—Calculation of PE RVUs Under Methodology for Selected Codes Back to Top
Step Source Formula 99213 Office visit, est nonfacility 33533 CABG, arterial, single facility 71020 Chest x-ray nonfacility 71020-TC Chest x-ray nonfacility 71020-26 Chest x-ray nonfacility 93000 ECG, complete nonfacility 93005 ECG, tracing nonfacility 93010 ECG, report nonfacility
Note: PE RVUs in Table 2, row 27, may not match Addendum B due to rounding.
* The direct adj = [current pe rvus * CF * avg dir pct]/[sum direct inputs] = [Step 2]/[Step 3].
** The indirect adj = [current pe rvus * avg ind pct]/[sum of ind allocators] = [Step 9]/[Step 10].
(1) Labor cost (Lab) Step 1 AMA 13.32 77.52 5.74 5.74 0.00 6.12 6.12 0.00
(2) Suppy cost (Sup) Step 1 AMA 2.98 7.34 3.39 3.39 0.00 1.19 1.19 0.00
(3) Equipment cost (Eqp) Step 1 AMA 0.19 0.65 8.17 8.17 0.00 0.12 0.12 0.00
(4) Direct cost (Dir) Step 1 =(1)+(2)+(3) 16.50 85.51 17.31 17.31 0.00 7.43 7.43 0.00
(5) Direct adjustment (Dir Adj) Steps 2-4 See footnote* 0.484 0.484 0.484 0.484 0.484 0.484 0.484 0.484
(6) Adjusted labor Steps 2-4 =Lab * Dir Adj =(1) * (5) 6.45 37.52 2.78 2.78 0.00 2.96 2.96 0.00
(7) Adjusted supplies Steps 2-4 =Sup * Dir Adj =(2) * (5) 1.44 3.55 1.64 1.64 0.00 0.58 0.58 0.00
(8) Adjusted equipment Steps 2-4 =Eqp * Dir Adj =(3) * (5) 0.09 0.32 3.96 3.96 0.00 0.06 0.06 0.00
(9) Adjusted direct Steps 2-4 =(6)+(7)+(8) 7.99 41.39 8.38 8.38 0.00 3.60 3.60 0.00
(10) Conversion Factor (CF) Step 5 PFS 36.0791 36.0791 36.0791 36.0791 36.0791 36.0791 36.0791 36.0791
(11) Adj. labor cost converted Step 5 =(Lab * Dir Adj)/CF =(6)/(10) 0.18 1.04 0.08 0.08 0.00 0.08 0.08 0.00
(12) Adj. supply cost converted Step 5 =(Sup * Dir Adj)/CF =(7)/(10) 0.04 0.10 0.05 0.05 0.00 0.02 0.02 0.00
(13) Adj. equip cost converted Step 5 =(Eqp * Dir Adj)/CF =(8)/(10) 0.00 0.01 0.11 0.11 0.00 0.00 0.00 0.00
(14) Adj. direct cost converted Step 5 =(11)+(12)+(13) 0.22 1.15 0.23 0.23 0.00 0.10 0.10 0.00
(15) Wrk RVU Setup File PFS 0.97 33.75 0.22 0.00 0.22 0.17 0.00 0.17
(16) Dir_pct Steps 6, 7 Surveys 25.5% 18.0% 28.9% 28.9% 28.9% 29.0% 29.0% 29.0%
(17) Ind_pct Steps 6, 7 Surveys 74.5% 82.0% 71.2% 71.2% 71.2% 71.1% 71.1% 71.1%
(18) Ind. Alloc. formula (1st part) Step 8 See Step 8 ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17)
(19) Ind. Alloc. (1st part) Step 8 See (18) 0.65 5.23 0.57 0.57 0.00 0.24 0.24 0.00
(20) Ind. Alloc. formulas (2nd part) Step 8 See Step 8 (15) (15) (15)+(11) (11) (15) (15)+(11) (11) (15)
(21) Ind. Alloc. (2nd part) Step 8 See (20) 0.97 33.75 0.30 0.08 0.22 0.25 0.08 0.17
(22) Indirect Allocator (1st+2nd) Step 8 =(19)+(21) 1.62 38.98 0.87 0.65 0.22 0.50 0.33 0.17
(23) Indirect Adjustment (Ind Adj) Steps 9-11 See footnote** 0.369 0.369 0.369 0.369 0.369 0.369 0.369 0.369
(24) Adjusted Indirect Allocator Steps 9-11 =Ind Alloc * Ind Adj 0.60 14.37 0.32 0.24 0.08 0.18 0.12 0.06
(25) Ind.Practice Cost Index (PCI) Steps 12-16 See Steps 12-16 1.104 0.831 0.852 0.852 0.852 0.926 0.926 0.926
(26) Adjusted Indirect Step 17 = Adj. Ind Alloc * PCI =(24) * (25) 0.66 11.95 0.27 0.20 0.07 0.17 0.11 0.06
(27) MEI Rebasing Adjustment Step 18 PFS 1.168 1.168 1.168 1.168 1.168 1.168 1.168 1.168
(28) MPPR Adjustment Step 18 PFS 1.011 1.011 1.011 1.011 1.011 1.011 1.011 1.011
(29) PE RVU Step 18 =(Adj Dir+Adj Ind) * budn * MEI Adj * MPPR Adj =((14)+(26)) * budn * (27) * (28) 1.03 15.36 0.59 0.51 0.08 0.32 0.25 0.07

3. Proposed PE Revisions for CY 2011

a. Equipment Utilization Rate

As part of the PE methodology associated with the allocation of equipment costs for calculating PE RVUs, we currently use an equipment utilization rate assumption of 50 percent for most equipment, with the exception of expensive diagnostic imaging equipment (which is equipment priced at over $1 million, for example, computed tomography (CT) and magnetic resonance imaging (MRI) scanners), for which we adopted a 90 percent utilization rate assumption and provided for a 4-year transition beginning in CY 2010 (74 FR 61755). Therefore, CY 2010 is the first transitional payment year. Payment is made in CY 2010 for the diagnostic services listed in Table 3 (those that include expensive diagnostic imaging equipment in their PE inputs) based on 25 percent of the new PE RVUs and 75 percent of the prior PE RVUs for those services.

Section 1848(b)(4)(C) of the Act (as added by section 3135(a) of the ACA) requires that with respect to fee schedules established for CY 2011 and subsequent years, in the methodology for determining PE RVUs for expensive diagnostic imaging equipment under the CY 2010 PFS final rule with comment period, the Secretary shall use a 75 percent assumption instead of the utilization rates otherwise established in that rule. The provision also requires that the reduced expenditures attributable to this change in the utilization rate for CY 2011 and subsequent years shall not be taken into account when applying the budget neutrality limitation on annual adjustments described in section 1848(c)(2)(B)(ii)(II) of the Act.

As a result, the 75 percent equipment utilization rate assumption will be applied to expensive diagnostic imaging equipment in a nonbudget neutral manner for CY 2011, and the changes to PE RVUs will not be transitioned over a period of years. We will apply the 75 percent utilization rate assumption in CY 2011 to all of the services to which we currently apply the transitional 90 percent utilization rate assumption in CY 2010. These services are listed in a file on the CMS Web site that is posted under downloads for the CY 2010 PFS final rule with comment period at: (http://www.cms.gov/physicianfeesched/downloads/CODES_SUBJECT_TO_90PCT_USAGE_RATE.zip). These codes are also displayed in Table 3.

Table 3—Current CPT Codes Subject to First Year (CY 2010) of 4-Year Transition to 90 Percent Equipment Utilization Rate Assumption and That Will Be Subject to the 75 Percent Equipment Utilization Rate Assumption in CY 2011 Back to Top
CPT code Short descriptor
70336 Mri, temporomandibular joint(s).
70450 Ct head/brain w/o dye.
70460 Ct head/brain w/dye.
70470 Ct head/brain w/o & w/dye.
70480 Ct orbit/ear/fossa w/o dye.
70481 Ct orbit/ear/fossa w/dye.
70482 Ct orbit/ear/fossa w/o & w/dye.
70486 Ct maxillofacial w/o dye.
70487 Ct maxillofacial w/dye.
70488 Ct maxillofacial w/o & w/dye.
70490 Ct soft tissue neck w/o dye.
70491 Ct soft tissue neck w/dye.
70492 Ct soft tissue neck w/o & w/dye.
70540 Mri orbit/face/neck w/o dye.
70542 Mri orbit/face/neck w/dye.
70543 Mri orbit/face/neck w/o & w/dye.
70551 Mri brain w/o dye.
70552 Mri brain w/dye.
70553 Mri brain w/o & w/dye.
70554 Fmri brain by tech.
71250 Ct thorax w/o dye.
71260 Ct thorax w/dye.
71270 Ct thorax w/o & w/dye.
71550 Mri chest w/o dye.
71551 Mri chest w/dye.
71552 Mri chest w/o & w/dye.
72125 CT neck spine w/o dye.
72126 Ct neck spine w/dye.
72127 Ct neck spine w/o & w/dye.
72128 Ct chest spine w/o dye.
72129 Ct chest spine w/dye.
72130 Ct chest spine w/o & w/dye.
72131 Ct lumbar spine w/o dye.
72132 Ct lumbar spine w/dye.
72133 Ct lumbar spine w/o & w/dye.
72141 Mri neck spine w/o dye.
72142 Mri neck spine w/dye.
72146 Mri chest spine w/o dye.
72147 Mri chest spine w/dye.
72148 Mri lumbar spine w/o dye.
72149 Mri lumbar spine w/dye.
72156 Mri neck spine w/o & w/dye.
72157 Mri chest spine w/o & w/dye.
72158 Mri lumbar spine w/o & w/dye.
72192 Ct pelvis w/o dye.
72193 Ct pelvis w/dye.
72194 Ct pelvis w/o & w/dye.
72195 Mri pelvis w/o dye.
72196 Mri pelvis w/dye.
72197 Mri pelvis w/o & w/dye.
73200 Ct upper extremity w/o dye.
73201 Ct upper extremity w/dye.
73202 Ct upper extremity w/o & w/dye.
73218 Mri upper extr w/o dye.
73219 Mri upper extr w/dye.
73220 Mri upper extremity w/o & w/dye.
73221 Mri joint upper extr w/o dye.
73222 Mri joint upper extr w/dye.
73223 Mri joint upper extr w/o & w/dye.
73700 Ct lower extremity w/o dye.
73701 Ct lower extremity w/dye.
73702 Ct lower extremity w/o & w/dye.
73718 Mri lower extremity w/o dye.
73719 Mri lower extremity w/dye.
73720 Mri lower ext w/dye & w/o dye.
73721 Mri joint of lwr extr w/o dye.
73722 Mri joint of lwr extr w/dye.
73723 Mri joint of lwr extr w/o & w/dye.
74150 Ct abdomen w/o dye.
74160 Ct abdomen w/dye.
74170 Ct abdomen w/o & w/dye.
74181 Mri abdomen w/o dye.
74182 Mri abdomen w/dye.
74183 Mri abdomen w/o and w/dye.
74261 Ct colonography, w/o dye.
74262 Ct colonography, w/dye.
75557 Cardiac mri for morph.
75559 Cardiac mri w/stress img.
75561 Cardiac mri for morph w/dye.
75563 Cardiac mri w/stress img & dye.
75571 Ct hrt w/o dye w/ca test.
75572 Ct hrt w/3d image.
75573 Ct hrt w/3d image, congen.
77058 Mri, one breast.
77059 Mri, both breasts.
77078 Ct bone density, axial.
77084 Magnetic image, bone marrow.

Additionally, for CY 2011, we are proposing to expand the list of services to which the higher equipment utilization rate assumption applies to all other diagnostic imaging services that utilize similar expensive CT and MRI scanners. The additional 24 CPT codes (listed in Table 4) to which we are proposing to apply the 75 percent equipment utilization rate assumption also have expensive diagnostic imaging equipment (priced at over $1 million) included in their PE inputs. These services are predominantly diagnostic computed tomographic angiography (CTA) and magnetic resonance angiography (MRA) procedures that include similar expensive CT and MRI scanners in their direct PE inputs. We indicated in the CY 2010 PFS final rule with comment period (74 FR 61754) that we were persuaded by PPIS data on angiography that the extrapolation of MRI and CT data (and their higher equipment utilization rate) may be inappropriate. However, this reference was limited to those procedures that include an angiography room in the direct PE inputs, such as CPT code 93510 (Left heart catheterization, retrograde, from the brachial artery, axillary artery or femoral artery; percutaneous). In contrast, CTA and MRA procedures include a CT room or MRI room, respectively, in the direct PE inputs, and the PPIS data confirm that a higher assumed utilization rate than 50 percent would be appropriate. The PPIS angiography room data that reflected a 56 percent equipment utilization rate would not specifically apply to CTA and MRA procedures. Thus, on further review, we believe it is appropriate to include CTA and MRA procedures in the list of procedures for which we assume a 75 percent equipment utilization rate, and we are proposing to do so beginning in CY 2011.

Consistent with section 1848(c)(2)(B)(v)(III) of the Act (as amended by section 3135 of the ACA), the reduced expenditures attributable to this change in the utilization rate assumption applicable to CY 2011 shall not be taken into account when applying the budget neutrality limitation on annual adjustments described in section 1848(c)(2)(B)(ii)(III) of the Act.

As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), CY 2011 is the second year of the 4-year transition to the PE RVUs calculated using the PPIS data. The reductions in the PE RVUs for expensive diagnostic imaging equipment attributable to the change to an equipment utilization rate assumption of 75 percent for CY 2011 are not subject to the transition.

Table 4—Proposed CPT Code Additions to the 75 Percent Equipment Utilization Rate Assumption CY 2011 Back to Top
CPT code Short descriptor
70496 Ct angiography, head.
70498 Ct angiography, neck.
70544 Mr angiography head w/o dye.
70545 Mr angiography head w/dye.
70546 Mr angiography head w/o & w/dye.
70547 Mr angiography neck w/o dye.
70548 Mr angiography neck w/dye.
70549 Mr angiography neck w/o & w/dye.
71275 Ct angiography, chest.
71555 Mri angio chest w/ or w/o dye.
72159 Mr angio spone w/o & w/dye.
72191 Ct angiography, pelv w/o & w/dye.
72198 Mri angio pelvis w/ or w/o dye.
73206 Ct angio upper extr w/o & w/dye.
73225 Mr angio upr extr w/o & w/dye.
73706 Ct angio lower ext w/o & w/dye.
73725 Mr angio lower ext w/ or w/o dye.
74175 Ct angiography, abdom w/o & w/dye.
74185 Mri angio, abdom w/ or w/o dye.
75565 Card mri vel flw map add-on.
75574 Ct angio hrt w/3d image.
75635 Ct angio abdominal arteries.
76380 CAT scan follow up study.
77079 Ct bone density, peripheral.

b. HCPCS Code-Specific PE Proposals

In this section, we discuss other specific CY 2011 proposals and changes related to direct PE inputs. The proposed changes that follow are included in the proposed CY 2011 direct PE database, which is available on the CMS Web site under the downloads for the CY 2011 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

(1) Biohazard Bags

We have identified 22 codes for which the supply item “biohazard bag” (SM004) is currently considered a direct PE input. The item is already properly accounted for in the indirect PE because it is not attributable to an individual patient service. Therefore, we are proposing to remove the biohazard bag from the CY 2011 direct PE database and the changes in direct PE inputs for the associated services are reflected in the proposed CY 2011 direct PE database.

(2) PE Inputs for Professional Component (PC) Only and Technical Component (TC) Only Codes Summing to Global Only Codes

In the case of selected diagnostic tests, different but related CPT codes are used to describe global, professional, and technical components of a service. These codes are unlike the majority of other diagnostic test CPT codes where modifiers may be used in billing a single CPT code in order to differentiate professional and technical components. When different but related CPT codes are used to report the components of these services, the different CPT codes are referred to as “global only,” “professional (PC) only,” and “technical (TC) only” codes. Medicare payment systems are programmed to ensure that the PE RVUs for global only codes equal the sum of the PE RVUs for the PC and TC only codes. However, it has come to our attention that the direct PE inputs for certain global only codes do not reflect the appropriate summation of their related TC only and PC only component code PE inputs as they appear in the direct PE database. While the PFS payment calculations have been programmed to apply the correct PE RVUs for the global only code based on a summation of component code PE RVUs, the direct PE database has reflected incorrect inputs that are overridden by the payment system. Therefore, we are proposing to correct the direct PE inputs for the global only codes so that the inputs reflect the appropriate summing of the PE inputs for the associated PC only and TC only codes. The proposed CY 2011 direct PE database includes PE corrections to the 14 CPT codes listed in Table 5.

Table 5—Groups of Related CPT Codes With Proposed Changes to PE Inputs So That Inputs for Professional Component (PC) Only and Technical Component (TC) Only Codes Sum to Global Only Codes Back to Top
CPT code Long descriptor
93224 Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage, with visual superimposition scanning; includes recording, scanning analysis with report, physician review and interpretation.
93225 Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage, with visual superimposition scanning; recording (includes connection, recording, disconnection).
93226 Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage, with visual superimposition scanning; scanning analysis with report.
93230 Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage without superimposition scanning utilizing a device capable of producing a full miniaturized printout; including recording, microprocessor-based analysis with report, physician review and interpretation.
93231 Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage without superimposition scanning utilizing a device capable of producing a full miniaturized printout; recording (includes connection, recording, and disconnection.
93232 Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage without superimposition scanning utilizing a device capable of producing a full miniaturized printout; microprocessor-based analysis with report.
93268 Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; includes transmission, physician review and interpretation.
93270 Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; recording (includes connection, recording, and disconnection).
93271 Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; monitoring, receipt of transmissions, and analysis.
93720 Plethysmography, total body; with interpretation and report.
93721 Plethysmography, total body; tracing only, without interpretation and report.
93784 Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or longer; including recording, scanning analysis, interpretation and report.
93786 Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or longer; recording only.
93788 Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or longer; scanning analysis with report.

(3) Equipment Time Inputs for Certain Diagnostic Tests

We have recently identified incorrect equipment time inputs for four CPT codes associated with certain diagnostic tests (each is displayed in Table 5):

  • CPT code 93225 is the TC only code that includes the connection, recording, and disconnection of the holter monitor (CMS Equipment Code EQ127) used in 24 hour continuous electrocardiographic rhythm derived monitoring. The current equipment time input for the holter monitor is 42 minutes, which parallels the intra-service clinical labor input time for the CPT code. However, the equipment time should reflect the 24 hours of continuous monitoring in which the device is used exclusively by the patient. Therefore, we are proposing to change the monitor equipment time for CPT code 93225 to 1440 minutes, the number of minutes in 24 hours.
  • CPT code 93226 is the TC only code that includes the scanning analysis with report. The number of minutes the monitor (CMS Equipment Code EQ127) is used in this service should parallel the intra-service clinical labor input time of 52 minutes during which the monitor is in use, instead of the current equipment time of 1440 minutes, because this code does not represent 24 hours of device use. Therefore, we are proposing to change the monitor equipment time for CPT code 93226 to 52 minutes.
  • CPT 93224 is the global only code that includes the connection, recording, and disconnection of the monitor (CMS Equipment Code EQ127) and the scanning analysis with report, as well as the physician review and interpretation. Under our proposal, its direct PE inputs have been appropriately summed to include the 1492 total minutes of time for the holter monitor that are included in CPT codes 93225 and 93226.
  • CPT code 93788 is the TC only code that describes the scanning analysis with report for ambulatory blood pressure monitoring. The equipment time input for the blood pressure monitor should parallel the 10 minutes of clinical labor input for the CPT code since that is the time during which the monitor is in use. Currently, the equipment time input for the monitor is 1440 minutes, which is appropriate only for CPT code 93786, the code that describes the 24 hours of ambulatory blood pressure monitoring recording. In this case, CPT code 93786's direct PE inputs are correct. Therefore, we are proposing to correct the equipment time input for the ambulatory blood pressure monitor in CPT code 93788 to 10 minutes.
  • CPT code 93784 is the global only code that includes the recording, the scanning analysis with report, and the physician interpretation and report for ambulatory blood pressure monitoring. Under our proposal, its direct PE inputs have been appropriately summed to include the 1450 total minutes of time for the ambulatory blood pressure monitor that are included in CPT codes 93786 and 93788.

We have modified the proposed CY 2011 direct PE database to reflect these changes.

(4) Cobalt-57 Flood Source

Stakeholders have requested that CMS reevaluate the useful life of the Cobalt-57 flood source (CMS Equipment Code ER001), given their estimate of approximately 271 days for the source's half-life. The current useful life input for the Colbalt-57 flood source is 5 years. Using publicly available catalogs, we found that the Cobalt-57 flood source is marketed with a useful life of 2 years. Therefore, we are proposing to change the useful life input from the current 5 years to 2 years. The Cobalt-57 flood source is included with the revised useful life input for 96 HCPCS codes in the proposed CY 2011 direct PE database.

(5) Venom Immunotherapy

One stakeholder provided updated price information for the venoms used for the five venom immunology CPT codes, specifically 95145 (Professional services for the supervision of preparation and provision of antigens for allergen immunotherapy (specify number of doses); single stinging insect venom); 95146 (Professional services for the supervision of preparation and provision of antigens for allergen immunotherapy (specify number of doses); 2 single stinging insect venoms); 95147 (Professional services for the supervision of preparation and provision of antigens for allergen immunotherapy (specify number of doses); 3 single stinging insect venoms); 95148 (Professional services for the supervision of preparation and provision of antigens for allergen immunotherapy (specify number of doses); 4 single stinging insect venoms); 95149 (Professional services for the supervision of preparation and provision of antigens for allergen immunotherapy (specify number of doses); 5 single stinging insect venoms).

In the CY 2004 PFS final rule with comment period (68 FR 63206), we adopted a pricing methodology that utilizes the average price of a 1 milliliter dose of venom and adds that price per dose as direct PE inputs for CPT codes 95145 and 95146. When a patient requires three stinging insect venoms, as for CPT code 95147, the price input for a 3-vespid mix is used. This 3-vespid mix price is also used to value CPT codes 95148 (four venoms) and 96149 (five venoms), with the single venom price added once to CPT code 97148 and twice to CPT code 97149.

As requested by the stakeholder, we are updating the price inputs for the 1-milliliter dose of venom to $16.67 and for the 3-vespid mix to $30.22 in the proposed CY 2011 direct PE database.

(6) Equipment Redundancy

Stakeholders have recently brought to our attention that the ECG, 3-channel (with SpO2, NIBP, temp, resp) (CMS Equipment Code EQ011) incorporates all of the functionality of the pulse oximeter with printer (CMS Equipment Code EQ211). Therefore, in HCPCS codes where CMS Equipment Code EQ011 is present, CMS Equipment Code EQ211 is redundant. On this basis, we are proposing to remove the pulse oximeter with printer (CMS Equipment Code EQ211) as an input for the 118 codes that also contain the ECG, 3-channel (with SpO2, NIBP, temp, resp) (CMS Equipment Code EQ011). We have made these adjustments in the proposed CY 2011 direct PE database.

(7) Equipment Duplication

We recently identified a number of CPT codes with duplicate equipment inputs in the PE database. We are proposing to remove the duplicate equipment items and have modified the proposed CY 2011 direct PE database accordingly as detailed in Table 6.

Table 6—CPT Codes With Proposed Removal of Duplicate Equipment Items in the Direct PE Database Back to Top
CPT code CMS equipment code for duplicate equipment Description of equipment
19302P-mastectomy w/ln removal EF014 light, surgical.
19361Breast reconstr w/lat flap ED005 camera, digital system, 12 megapixel (medical grade).
EF031 table, power.
EQ168 light, exam.
44157Colectomy w/ileoanal anast EF031 table, power.
EQ168 light, exam.
44158Colectomy w/neo-rectum pouch EF031 table, power.
EQ168 light, exam.
56440Surgery for vulva lesion EF031 table, power.
EQ170 light, fiberoptic headlight w-source.
57296Revise vag graft, open abd EF031 table, power.
EQ170 light, fiberoptic headlight w-source.
58263Vag hyst w/t/o & vag repair EF031 table, power.
59610Vbac delivery EF031 table, power.
67228Treatment of retinal lesion EL005 lane, exam (oph).
EQ230 slit lamp (Haag-Streit), dedicated to laser use.
76813Ob us nuchal meas, 1 gest ED024 film processor, dry, laser.
77371Srs, multisource EQ211 pulse oximeter w-printer.
93540Injection, cardiac cath ED018 computer workstation, cardiac cath monitoring.
EL011 room, angiography.
EQ011 ECG, 3-channel (with SpO2, NIBP, temp, resp).
EQ032 IV infusion pump.
EQ088 contrast media warmer.
EQ211 pulse oximeter w-printer.
93542Injection for heart x-rays ED018 computer workstation, cardiac cath monitoring.
EL011 room, angiography.
EQ011 ECG, 3-channel (with SpO2, NIBP, temp, resp).
EQ032 IV infusion pump.
EQ088 contrast media warmer.
EQ211 pulse oximeter w-printer.

(8) Establishing Overall Direct PE Supply Price Inputs Based on Unit Prices and Quantities

We have identified minor errors in total price inputs for a number of supply items due to mathematical mistakes in multiplying the item unit price and the quantity used in particular CPT codes for the associated services. We are proposing to modify the direct PE database to appropriately include the overall supply price input for a supply item as the product of the unit price and the quantity of the supply item used in the CPT code. Most of the overall supply price input changes are small, and we have adjusted the proposed CY 2011 direct PE database accordingly. The CPT and Level II HCPCS codes and associated supplies for nonfacility and facility settings that are subject to these corrections are displayed in Tables 7 and 8, respectively.

Table 7—Overall Supply Price Calculation Corrections for Nonfacility Settings Back to Top
CPT/HCPCS code Short descriptor CMS Supply code with overall price corrections Description of supply
11952 Therapy for contour defects SC029 needle, 18-27g.
11954 Therapy for contour defects SC029 needle, 18-27g.
15820 Revision of lower eyelid SA082 pack, ophthalmology visit (w-dilation).
15821 Revision of lower eyelid SA082 pack, ophthalmology visit (w-dilation).
15822 Revision of upper eyelid SA082 pack, ophthalmology visit (w-dilation).
17311 Mohs, 1 stage, h/n/hf/g SG078 tape, surgical occlusive 1in (Blenderm).
17312 Mohs addl stage SG078 tape, surgical occlusive 1in (Blenderm).
17313 Mohs, 1 stage, t/a/l SG078 tape, surgical occlusive 1in (Blenderm).
17314 Mohs, addl stage, t/a/l SG078 tape, surgical occlusive 1in (Blenderm).
21011 Exc face les sc < 2 cm SH046 lidocaine 1% w-epi inj (Xylocaine w-epi).
21013 Exc face tum deep < 2 cm SH046 lidocaine 1% w-epi inj (Xylocaine w-epi).
21073 Mnpj of tmj w/anesth SG079 tape, surgical paper 1in (Micropore).
21076 Prepare face/oral prosthesis SL047 dental stone powder.
21081 Prepare face/oral prosthesis SK024 film, dental.
21310 Treatment of nose fracture SB034 mask, surgical, with face shield.
23075 Exc shoulder les sc < 3 cm SG056 gauze, sterile 4in x 4in (10 pack uou).
SH021 bupivacaine 0.25% inj (Marcaine).
24075 Exc arm/elbow les sc < 3 cm SG056 gauze, sterile 4in x 4in (10 pack uou).
SH021 bupivacaine 0.25% inj (Marcaine).
25075 Exc forearm les sc < 3 cm SG056 gauze, sterile 4in x 4in (10 pack uou).
SH021 bupivacaine 0.25% inj (Marcaine).
26115 Exc hand les sc < 1.5 cm SG056 gauze, sterile 4in x 4in (10 pack uou).
SH021 bupivacaine 0.25% inj (Marcaine).
27327 Exc thigh/knee les sc < 3 cm SG056 gauze, sterile 4in x 4in (10 pack uou).
27618 Exc leg/ankle tum < 3 cm SG056 gauze, sterile 4in x 4in (10 pack uou).
28039 Exc foot/toe tum sc > 1.5 cm SG056 gauze, sterile 4in x 4in (10 pack uou).
28043 Exc foot/toe tum sc < 1.5 cm SG056 gauze, sterile 4in x 4in (10 pack uou).
28045 Exc foot/toe tum deep < 1.5cm SG056 gauze, sterile 4in x 4in (10 pack uou).
28306 Incision of metatarsal SA048 pack, minimum multi-specialty visit.
28307 Incision of metatarsal SA048 pack, minimum multi-specialty visit.
28310 Revision of big toe SA048 pack, minimum multi-specialty visit.
28312 Revision of toe SA048 pack, minimum multi-specialty visit.
28313 Repair deformity of toe SA048 pack, minimum multi-specialty visit.
28315 Removal of sesamoid bone SA048 pack, minimum multi-specialty visit.
28340 Resect enlarged toe tissue SA048 pack, minimum multi-specialty visit.
28344 Repair extra toe(s) SA048 pack, minimum multi-specialty visit.
28345 Repair webbed toe(s) SA048 pack, minimum multi-specialty visit.
28496 Treat big toe fracture SA048 pack, minimum multi-specialty visit.
28755 Fusion of big toe joint SA048 pack, minimum multi-specialty visit.
28820 Amputation of toe SA048 pack, minimum multi-specialty visit.
28890 High energy eswt, plantar f SC051 syringe 10-12ml.
29870 Knee arthroscopy, dx SG079 tape, surgical paper 1in (Micropore).
32553 Ins mark thor for rt perq SB034 mask, surgical, with face shield.
36475 Endovenous rf, 1st vein SC074 iv pressure infusor bag.
36592 Collect blood from picc SG050 gauze, non-sterile 2in x 2in.
41530 Tongue base vol reduction SD009 canister, suction.
41805 Removal foreign body, gum SD134 tubing, suction, non-latex (6ft) with Yankauer tip (1).
41806 Removal foreign body, jawbone SD134 tubing, suction, non-latex (6ft) with Yankauer tip (1).
42107 Excision lesion, mouth roof SD009 canister, suction.
46505 Chemodenervation anal musc SD009 canister, suction.
49411 Ins mark abd/pel for rt perq SB034 mask, surgical, with face shield.
49440 Place gastrostomy tube perc SK089 x-ray developer solution.
49441 Place duod/jej tube perc SK089 x-ray developer solution.
49442 Place cecostomy tube perc SK089 x-ray developer solution.
49446 Change g-tube to g-j perc SK089 x-ray developer solution.
49450 Replace g/c tube perc SK089 x-ray developer solution.
49451 Replace duod/jej tube perc SK089 x-ray developer solution.
49452 Replace g-j tube perc SK089 x-ray developer solution.
49460 Fix g/colon tube w/device SK089 x-ray developer solution.
49465 Fluoro exam of g/colon tube SK089 x-ray developer solution.
50382 Change ureter stent, percut SB034 mask, surgical, with face shield.
50384 Remove ureter stent, percut SB034 mask, surgical, with face shield.
50385 Change stent via transureth SB034 mask, surgical, with face shield.
50386 Remove stent via transureth SB034 mask, surgical, with face shield.
50387 Change ext/int ureter stent SB034 mask, surgical, with face shield.
50389 Remove renal tube w/fluoro SB034 mask, surgical, with face shield.
51100 Drain bladder by needle SH047 lidocaine 1%-2% inj (Xylocaine).
51101 Drain bladder by trocar/cath SH047 lidocaine 1%-2% inj (Xylocaine).
51727 Cystometrogram w/up SC051 syringe 10-12ml.
51728 Cystometrogram w/vp SC051 syringe 10-12ml.
51729 Cystometrogram w/vp&up SC051 syringe 10-12ml.
52649 Prostate laser enucleation SA048 pack, minimum multi-specialty visit.
53855 Insert prost urethral stent SB024 gloves, sterile.
59300 Episiotomy or vaginal repair SG062 packing, gauze plain 0.25-0.50in (5 yd uou).
59812 Treatment of miscarriage SA052 pack, post-op incision care (staple).
64490 Inj paravert f jnt c/t 1 lev SK025 film, dry, radiographic, 8in x 10in.
64493 Inj paravert f jnt l/s 1 lev SH021 bupivacaine 0.25% inj (Marcaine).
SK025 film, dry, radiographic, 8in x 10in.
65272 Repair of eye wound SA082 pack, ophthalmology visit (w-dilation).
65286 Repair of eye wound SA082 pack, ophthalmology visit (w-dilation).
66250 Follow-up surgery of eye SA082 pack, ophthalmology visit (w-dilation).
67031 Laser surgery, eye strands SA082 pack, ophthalmology visit (w-dilation).
67105 Repair detached retina SA082 pack, ophthalmology visit (w-dilation).
67110 Repair detached retina SA082 pack, ophthalmology visit (w-dilation).
67120 Remove eye implant material SA082 pack, ophthalmology visit (w-dilation).
67228 Treatment of retinal lesion SA082 pack, ophthalmology visit (w-dilation).
67901 Repair eyelid defect SA048 pack, minimum multi-specialty visit.
75571 Ct hrt w/o dye w/ca test SJ019 electrode adhesive disk.
75572 Ct hrt w/3d image SJ019 electrode adhesive disk.
75573 Ct hrt w/3d image, congen SJ019 electrode adhesive disk.
75574 Ct angio hrt w/3d image SJ019 electrode adhesive disk.
75960 Transcath iv stent rs&i SK034 film, x-ray 14in x 17in.
76821 Middle cerebral artery echo SM013 disinfectant, surface (Envirocide, Sanizide).
77371 Srs, multisource SG079 tape, surgical paper 1in (Micropore).
77372 Srs, linear based SG079 tape, surgical paper 1in (Micropore).
77373 Sbrt delivery SG079 tape, surgical paper 1in (Micropore).
78452 Ht muscle image spect, mult SC051 syringe 10-12ml.
SK092 x-ray fixer solution
78454 Ht musc image, planar, mult SK092 x-ray fixer solution.
88125 Forensic cytopathology SL026 clearing agent (Histo-clear).
88355 Analysis, skeletal muscle SK073 skin marking ink (tattoo).
SL061 embedding paraffin.
SL078 histology freezing spray (Freeze-It).
SL201 stain, eosin.
88356 Analysis, nerve SB023 gloves, non-sterile, nitrile.
SK073 skin marking ink (tattoo).
SL061 embedding paraffin.
SL078 histology freezing spray (Freeze-It).
SL108 pipette.
SL201 stain, eosin.
88365 Insitu hybridization (fish) SF004 blade, microtome.
SL179 1.0N NaOH.
SL183 slide, organosilane coated.
SL189 ethanol, 100%.
SL190 ethanol, 70%.
SL194 Hemo-De.
SM016 eye shield, splash protection.
88367 Insitu hybridization, auto SC057 syringe 5-6ml.
SF004 blade, microtome.
SL030 cover slip, glass.
SL085 label for microscope slides.
SL178 0.2N HCL.
SL179 1.0N NaOH.
SL181 pipette tips, sterile.
SL183 slide, organosilane coated.
SL189 ethanol, 100%.
SL190 ethanol, 70%.
SL191 ethanol, 85%.
SL194 Hemo-De.
SM016 eye shield, splash protection.
88368 Insitu hybridization, manual SF004 blade, microtome.
SL179 1.0N NaOH.
SL183 slide, organosilane coated.
SL189 ethanol, 100%.
SL190 ethanol, 70%.
SL194 Hemo-De.
SM016 eye shield, splash protection.
88385 Eval molecul probes, 51-250 SL207 air, filtered, compressed.
SL218 DNA, Versagene, blood kit.
SL220 ethanol, 200%.
SL225 gas, nitogen, ultra-high purity (compressed), grade 5.0.
88386 Eval molecul probes, 251-500 SL207 air, filtered, compressed.
SL218 DNA, Versagene, blood kit.
SL220 ethanol, 200%.
SL225 gas, nitogen, ultra-high purity (compressed), grade 5.0.
90470 Immune admin H1N1 im/nasal SB036 paper, exam table.
91065 Breath hydrogen test (blank) Sivrite-4.
91132 Electrogastrography SD062 electrode, surface.
91133 Electrogastrography w/test SD062 electrode, surface.
92550 Tympanometry & reflex thresh SK059 paper, recording (per sheet).
92597 Oral speech device eval SB022 gloves, non-sterile.
92610 Evaluate swallowing function SB022 gloves, non-sterile.
92626 Eval aud rehab status SK008 audiology scoring forms.
92627 Eval aud status rehab add-on SK008 audiology scoring forms.
92640 Aud brainstem implt programg SK068 razor.
95004 Percut allergy skin tests SC023 multi-tine device.
95024 Id allergy test, drug/bug SA048 pack, minimum multi-specialty visit.
SG050 gauze, non-sterile 2in x 2in.
95027 Id allergy titrate-airborne SA048 pack, minimum multi-specialty visit.
SC052 syringe 1ml.
95044 Allergy patch tests SK087 water, distilled.
95052 Photo patch test SK087 water, distilled.
95148 Antigen therapy services SH009 antigen, venom.
95805 Multiple sleep latency test SK094 x-ray marking pencil.
96040 Genetic counseling, 30 min SK062 patient education booklet.
96102 Psycho testing by technician SK057 paper, laser printing (each sheet).
96360 Hydration iv infusion, init SC018 iv infusion set.
SC051 syringe 10-12ml.
SG050 gauze, non-sterile 2in x 2in.
96365 Ther/proph/diag iv inf, init SC018 iv infusion set.
SC051 syringe 10-12ml.
SG050 gauze, non-sterile 2in x 2in.
96366 Ther/proph/diag iv inf addon SB022 gloves, non-sterile.
96367 Tx/proph/dg addl seq iv inf SB022 gloves, non-sterile.
96369 Sc ther infusion, up to 1 hr SC013 infusion pump cassette-reservoir.
96371 Sc ther infusion, reset pump SC013 infusion pump cassette-reservoir.
96372 Ther/proph/diag inj, sc/im SB022 gloves, non-sterile.
96374 Ther/proph/diag inj, iv push SB022 gloves, non-sterile.
SC051 syringe 10-12ml.
SG050 gauze, non-sterile 2in x 2in.
96375 Tx/pro/dx inj new drug addon SB022 gloves, non-sterile.
SC051 syringe 10-12ml.
96401 Chemo, anti-neopl, sq/im SC051 syringe 10-12ml.
SG050 gauze, non-sterile 2in x 2in.
96402 Chemo hormon antineopl sq/im SC051 syringe 10-12ml.
SG050 gauze, non-sterile 2in x 2in.
96409 Chemo, iv push, sngl drug SC018 iv infusion set 22.
SC051 syringe 10-12ml.
96411 Chemo, iv push, addl drug SC018 iv infusion set.
SC051 syringe 10-12ml.
96413 Chemo, iv infusion, 1 hr SC018 iv infusion set.
SC051 syringe 10-12ml.
96417 Chemo iv infus each addl seq SC018 iv infusion set.
96445 Chemotherapy, intracavitary SC018 iv infusion set.
SH069 sodium chloride 0.9% irrigation (500-1000ml uou).
96542 Chemotherapy injection SC018 iv infusion set.
99366 Team conf w/pat by hc pro SK062 patient education booklet.
G0270 MNT subs tx for change dx SK057 paper, laser printing (each sheet).
SK062 patient education booklet.
G0271 Group MNT 2 or more 30 mins SK057 paper, laser printing (each sheet).
Table 8—Overall Supply Price Calculation Corrections for Facility Settings Back to Top
CPT/HCPCS Code Short descriptor CMS supply code with overall price corrections Description of supply
15738 Muscle-skin graft, leg SG017 bandage, Kling, non-sterile 2in.
15820 Revision of lower eyelid SA082 pack, ophthalmology visit (w-dilation).
15821 Revision of lower eyelid SA082 pack, ophthalmology visit (w-dilation).
15822 Revision of upper eyelid SA082 pack, ophthalmology visit (w-dilation).
19303 Mast, simple, complete SB006 drape, non-sterile, sheet 40in x 60in.
20900 Removal of bone for graft SA054 pack, post-op incision care (suture).
21011 Exc face les sc < 2 cm SA048 pack, minimum multi-specialty visit.
21013 Exc face tum deep < 2 cm SA048 pack, minimum multi-specialty visit.
21193 Reconst lwr jaw w/o graft SJ061 tongue depressor.
21194 Reconst lwr jaw w/graft SJ061 tongue depressor.
21240 Reconstruction of jaw joint SJ061 tongue depressor.
21366 Treat cheek bone fracture SJ061 tongue depressor.
21435 Treat craniofacial fracture SJ061 tongue depressor.
21555 Exc neck les sc < 3 cm SA048 pack, minimum multi-specialty visit.
21930 Exc back les sc < 3 cm SA048 pack, minimum multi-specialty visit.
22902 Exc abd les sc < 3 cm SA048 pack, minimum multi-specialty visit.
23075 Exc shoulder les sc < 3 cm SA048 pack, minimum multi-specialty visit.
24075 Exc arm/elbow les sc < 3 cm SA048 pack, minimum multi-specialty visit.
25075 Exc forearm les sc < 3 cm SA048 pack, minimum multi-specialty visit.
26115 Exc hand les sc < 1.5 cm SA048 pack, minimum multi-specialty visit.
27047 Exc hip/pelvis les sc < 3 cm SA048 pack, minimum multi-specialty visit.
27327 Exc thigh/knee les sc < 3 cm SA048 pack, minimum multi-specialty visit.
27618 Exc leg/ankle tum < 3 cm SA048 pack, minimum multi-specialty visit.
28307 Incision of metatarsal SA048 pack, minimum multi-specialty visit.
28340 Resect enlarged toe tissue SA048 pack, minimum multi-specialty visit.
28345 Repair webbed toe(s) SA048 pack, minimum multi-specialty visit.
28820 Amputation of toe SA048 pack, minimum multi-specialty visit.
33516 Cabg, vein, six or more SA052 pack, post-op incision care (staple).
34510 Transposition of vein valve SA054 pack, post-op incision care (suture).
35013 Repair artery rupture, arm SA048 pack, minimum multi-specialty visit.
41150 Tongue, mouth, jaw surgery SA048 pack, minimum multi-specialty visit.
41153 Tongue, mouth, neck surgery SA048 pack, minimum multi-specialty visit.
41155 Tongue, jaw, & neck surgery SA048 pack, minimum multi-specialty visit.
41805 Removal foreign body, gum SD134 tubing, suction, non-latex (6ft) with Yankauer tip (1).
41806 Removal foreign body, jawbone SD134 tubing, suction, non-latex (6ft) with Yankauer tip (1).
42160 Treatment mouth roof lesion SD122 suction tip, Yankauer.
51925 Hysterectomy/bladder repair SB006 drape, non-sterile, sheet 40in x 60in.
56620 Partial removal of vulva SA048 pack, minimum multi-specialty visit.
57284 Repair paravag defect, open SA051 pack, pelvic exam.
SB006 drape, non-sterile, sheet 40in x 60in.
57285 Repair paravag defect, vag SA051 pack, pelvic exam.
SB006 drape, non-sterile, sheet 40in x 60in.
57423 Repair paravag defect, lap SA051 pack, pelvic exam.
SB006 drape, non-sterile, sheet 40in x 60in.
58660 Laparoscopy, lysis SB006 drape, non-sterile, sheet 40in x 60in.
58662 Laparoscopy, excise lesions SJ046 silver nitrate applicator.
58670 Laparoscopy, tubal cautery SJ046 silver nitrate applicator.
58940 Removal of ovary(s) SA052 pack, post-op incision care (staple).
58952 Resect ovarian malignancy SB006 drape, non-sterile, sheet 40in x 60in.
64632 N block inj, common digit SA048 pack, minimum multi-specialty visit.
65112 Remove eye/revise socket SA050 pack, ophthalmology visit (no dilation).
65114 Remove eye/revise socket SA050 pack, ophthalmology visit (no dilation).
65235 Remove foreign body from eye SA082 pack, ophthalmology visit (w-dilation).
65265 Remove foreign body from eye SA082 pack, ophthalmology visit (w-dilation).
65272 Repair of eye wound SA082 pack, ophthalmology visit (w-dilation).
65273 Repair of eye wound SA082 pack, ophthalmology visit (w-dilation).
65280 Repair of eye wound SA082 pack, ophthalmology visit (w-dilation).
65285 Repair of eye wound SA082 pack, ophthalmology visit (w-dilation).
65286 Repair of eye wound SA082 pack, ophthalmology visit (w-dilation).
65290 Repair of eye socket wound SA082 pack, ophthalmology visit (w-dilation).
65770 Revise cornea with implant SA050 pack, ophthalmology visit (no dilation).
65850 Incision of eye SA082 pack, ophthalmology visit (w-dilation).
65865 Incise inner eye adhesions SA082 pack, ophthalmology visit (w-dilation).
65870 Incise inner eye adhesions SA082 pack, ophthalmology visit (w-dilation).
66180 Implant eye shunt SA082 pack, ophthalmology visit (w-dilation).
66185 Revise eye shunt SA082 pack, ophthalmology visit (w-dilation).
66220 Repair eye lesion SA082 pack, ophthalmology visit (w-dilation).
66250 Follow-up surgery of eye SA082 pack, ophthalmology visit (w-dilation).
66500 Incision of iris SA082 pack, ophthalmology visit (w-dilation).
66600 Remove iris and lesion SA082 pack, ophthalmology visit (w-dilation).
66605 Removal of iris SA082 pack, ophthalmology visit (w-dilation).
66625 Removal of iris SA082 pack, ophthalmology visit (w-dilation).
66630 Removal of iris SA082 pack, ophthalmology visit (w-dilation).
66635 Removal of iris SA082 pack, ophthalmology visit (w-dilation).
66682 Repair iris & ciliary body SA082 pack, ophthalmology visit (w-dilation).
66820 Incision, secondary cataract SA082 pack, ophthalmology visit (w-dilation).
66850 Removal of lens material SA082 pack, ophthalmology visit (w-dilation).
66852 Removal of lens material SA082 pack, ophthalmology visit (w-dilation).
66930 Extraction of lens SA082 pack, ophthalmology visit (w-dilation).
66940 Extraction of lens SA082 pack, ophthalmology visit (w-dilation).
66983 Cataract surg w/iol, 1 stage SA082 pack, ophthalmology visit (w-dilation).
67015 Release of eye fluid SA082 pack, ophthalmology visit (w-dilation).
67031 Laser surgery, eye strands SA082 pack, ophthalmology visit (w-dilation).
67036 Removal of inner eye fluid SA082 pack, ophthalmology visit (w-dilation).
67040 Laser treatment of retina SA082 pack, ophthalmology visit (w-dilation).
67105 Repair detached retina SA082 pack, ophthalmology visit (w-dilation).
67107 Repair detached retina SA082 pack, ophthalmology visit (w-dilation).
67110 Repair detached retina SA082 pack, ophthalmology visit (w-dilation).
67115 Release encircling material SA082 pack, ophthalmology visit (w-dilation).
67120 Remove eye implant material SA082 pack, ophthalmology visit (w-dilation).
67228 Treatment of retinal lesion SA082 pack, ophthalmology visit (w-dilation).
67400 Explore/biopsy eye socket SA082 pack, ophthalmology visit (w-dilation).
67412 Explore/treat eye socket SA082 pack, ophthalmology visit (w-dilation).
67440 Explore/drain eye socket SA082 pack, ophthalmology visit (w-dilation).
67908 Repair eyelid defect SG008 applicator, cotton-tipped, non-sterile 6in.
88356 Analysis, nerve SL108 pipette.

c. AMA RUC Recommendations in CY 2010 for Changes to Direct PE Inputs

In a March 2010 letter, the AMA RUC made specific PE recommendations that we consider below. As stated earlier, the proposed changes that follow are included in the proposed CY 2011 direct PE database, which is available on the CMS Web site under the downloads for the CY 2011 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

(1) Electrogastrography and Esophageal Function Test

We are accepting the AMA RUC recommendations for the CY 2011 PE inputs for the following CPT codes: 91132 (Electrogastrography, diagnostic, transcutaneous); 91133 (Electrogastrography, diagnostic, transcutaneous; with provocative testing); 91038 (Esophageal function test, gastroesophageal reflux test with nasal catheter intraluminal impedance electrode(s) placement, recording, analysis and interpretation; prolonged (greater than 1 hour, up to 24 hours)). For CPT code 91038, we have assumed a useful life of 5 years for the equipment item “ZEPHR impedance/pH reflux monitoring system with data recorder, software, monitor, workstation and cart,” based on its entry in the AHA's publication, “Estimated Useful Lives of Depreciable Hospital Assets,” which we use as a standard reference. The proposed CY 2011 direct PE database has been changed accordingly.

(2) 64-Slice CT Scanner and Software

The AMA RUC submitted an updated recommendation regarding the correct pricing of the 64-slice CT scanner and its accompanying software. Based on the documentation accompanying the recommendation, we are accepting this recommendation and updating the price input for the 64-slice scanner and software. This affects the following four CPT codes that use either the scanner, the software, or both: 75571 (computed tomography, heart, without contrast material, with quantitative evaluation of coronary calcium); 75572 (Computed tomography, heart, with contrast material, for evaluation of cardiac structure and morphology (including 3D image postprocessing, assessment of cardiac function, and evaluation of venous structures, if performed)); 75573 (Computed tomography, heart, with contrast material, for evaluation of cardiac structure and morphology in the setting of congenital heart disease (including 3D image postprocessing, assessment of LV cardiac function, RV structure and function and evaluation of venous structures, if performed)); and 75574 (Computed tomographic angiography, heart, coronary arteries and bypass grafts (when present), with contrast material, including 3D image postprocessing (including evaluation of cardiac structure and morphology, assessment of cardiac function, and evaluation of venous structure, if performed)). The proposed CY 2011 direct PE database has been modified accordingly.

(3) Cystometrogram

The AMA RUC recently identified a rank order anomaly regarding CPT code 51726 (Complex cystometrogram (i.e., calibrated electronic equipment)). Currently, this procedure has higher PE RVUs, despite being less resource- intensive than the three CPT codes for which it serves as the base: 51727 (Complex cystometrogram (i.e., calibrated electronic equipment); with urethral pressure profile studies (i.e., urethral closure pressure profile), any technique); 51728 (Complex cystometrogram (i.e., calibrated electronic equipment); with voiding pressure studies (i.e., bladder voiding pressure), any technique); and 51729 (Complex cystometrogram (i.e., calibrated electronic equipment); with voiding pressure studies (i.e., bladder voiding pressure) and urethral pressure profile studies (i.e., urethral closure pressure profile), any technique).

Since usual AMA RUC policy is that CPT codes with a 0-day global period do not have pre-service time associated with the code, the AMA RUC recommended removing the nonfacility pre-service clinical staff time from the PE inputs for 51726. Additionally, the AMA RUC recommended that the nonfacility clinical intra-service staff time for CPT code 51276 be reduced from the 118 minutes of intra-service clinical staff time currently assigned to the code to 85 minutes of intra-service clinical staff time. These changes would resolve the rank order anomaly and bring the PE inputs for CPT code 51726 into alignment with the other three codes. Finally, and for the reasons stated above, the AMA RUC recommended that CMS remove the 23 minutes of pre-service nonfacility clinical staff time from CPT code 51725 (Simple cystometrogram (CMG) (e.g., spinal manometer)). We are accepting these recommendations and, therefore, have changed the direct PE inputs for CPT codes 51725 and 51726 in the nonfacility setting in the proposed CY 2011 direct PE database.

(4) Breath Hydrogen Test

The AMA RUC provide recommendations regarding the PE inputs for CPT code 91065 (breath hydrogen test (e.g., for detection of lactase deficiency, fructose intolerance, bacterial overgrowth, or oro-cecal gastrointestinal transit). We are accepting the recommendations with two modifications. We have folded the two pieces of equipment listed as “quinGas Table-Top Support Stand, 3 Tank” and “Drying Tube, Patient Sample” into the “BreathTrackerDigital SC Instrument” and summed their inputs into one equipment line-item, since these equipment items are used together specifically for the service in question. We have increased the useful life input of the “BreathTrackerDigital SC Instrument” from 7 to 8 years based on our use of the American Hospital Association (AHA)'s publication entitled, “Estimated Useful Lives of Depreciable Hospital Assets” as a standard reference. Additionally, because the AMA RUC did not include equipment times in their recommendations for this CPT code, we have used 53 minutes as the total time for all equipment items based on the total intra-service period for the clinical labor, consistent with our general policy for establishing equipment times. These modifications are reflected in the proposed CY 2011 direct PE database.

(5) Radiographic Fluoroscopic Room

A recent AMA RUC review of services that include the radiographic fluoroscopic room (CMS Equipment Code EL014) as a direct PE revealed that the use of the item is no longer typical for certain services in which it is specified within the current direct cost inputs. The AMA RUC recommended to CMS that the radiographic fluoroscopic room be deleted from CPT codes 64420 (Injection, anesthetic agent; intercostal nerve, single); 64421 (Injection, anesthetic agent; intercostal nerves, multiple, regional block); and 64620 (Destruction by neurolytic agent, intercostal nerve).

We are accepting these recommendations and, therefore, these changes are included in the proposed CY 2011 direct PE database.

The AMA RUC also informed us that it has convened a workgroup to examine the inclusion of the fluoroscopic room across a broader range of codes. We will consider any future recommendations from the AMA RUC on this topic when they are submitted.

d. Referral of Existing CPT Codes for AMA RUC Review

As part of our review of high cost supplies, we conducted a clinical review of the procedures associated with high cost supplies to confirm that those supplies currently are used in the typical case described by the CPT codes. While we confirmed that most high cost supplies could be used in the procedures for which they are currently direct PE inputs, we noted that one of the high cost supplies, fiducial screws (CMS Supply Code SD073) with a current price of $558, is included as a direct PE input for two CPT codes, specifically 77301 (Intensity modulated radiotherapy plan, including dose-volume histograms for target and critical structure partial tolerance specifications) and 77011 (Computed tomography guidance for stereotactic localization). The documentation used in the current pricing of the supply item describes a kit that includes instructions, skull screws, a drill bit, and a collar for the TALON® System manufactured by Best nomos. Best nomos' literature describes the insertion of the screws into the patient's skull to ensure accurate set-up. When CPT codes 77301 and 77011 were established in CY 2002 and CY 2003, respectively, we accepted the AMA RUC recommendations to include fiducial screws in the PE for these services. Upon further review, while we understand why this supply may be considered a typical PE input for CPT code 77011, we do not now believe that fiducial screws, as described in the Best nomos literature, would typically be used in CPT code 77301, where the most common clinical scenario would be treatment of prostate cancer.

Therefore, in order to ensure that CPT codes 77301 and 77011 are appropriately valued for CY 2011 through the inclusion or exclusion of fiducial screws in their PE, we are asking the AMA RUC to review these CPT codes with respect to the inclusion of fiducial screws in their PE. We are requesting that the AMA RUC make recommendations to us regarding whether this supply should be included in the PE or removed from the PE for CPT codes 77301 and 77011 in a timeframe that would allow us to adopt interim values for these codes for CY 2011, should the AMA RUC recommend a change. If the AMA RUC continues to recommend the inclusion of fiducial screws in the PE for CPT code 77301 and/or 77011 for CY 2011, we are requesting that the AMA RUC provide us with a detailed rationale for the inclusion of this specialized supply in the PE for the typical case reported under the relevant CPT code. We would also request that the AMA RUC furnish updated pricing information for the screws if they continue to recommend the screws as a PE input for one or both of these CPT codes in CY 2011.

e. Updating Equipment and Supply Price Inputs for Existing Codes

Historically, we have periodically received requests to change the PE price inputs for supplies and equipment in the PE database. In the past, we have considered these requests on an ad hoc basis and updated the price inputs as part of quarterly or annual updates if we believed them to be appropriate. In this proposed rule, we are proposing to establish a regular and more transparent process for considering public requests for changes to PE database price inputs for supplies and equipment used in existing codes.

We are proposing to act on public requests to update equipment and supply price inputs annually through rulemaking by following a regular and consistent process as discussed in the following paragraphs. We are proposing to use the annual PFS proposed rule released in the summer and the final rule released on or about November 1 each year as the vehicle for making these changes.

We will accept requests for updating the price inputs for supplies and equipment on an ongoing basis; requests must be received no later than December 31 of each CY to be considered for inclusion in the next proposed rule. In that next proposed rule, we would present our review of submitted requests to update price inputs for specific equipment or supplies and our proposals for the subsequent calendar year. We would then finalize changes in the final rule for the upcoming calendar year. Our review of the issues and consideration of public comments may result in the following outcomes that would be presented in the final rule with comment period:

  • Updating the equipment or supply price inputs, as requested.
  • Updating the equipment or supply price inputs, with modifications.
  • Rejecting the new price inputs.
  • Declining to act on the request pending a recommendation from the AMA RUC.

To facilitate our review and preparation of issues for the proposed rule, at a minimum, we would expect that requesters would provide the following information:

In order to best evaluate the requests in the context of our goal of utilizing accurate market prices for these items as direct PE inputs, we also would expect requestors to provide multiple invoices from different suppliers/manufacturers. In some cases, multiple sources may not be available, whereupon a detailed explanation should be provided to support the request. When furnishing invoices, requestors should take into consideration the following parameters:

++ May be either print or electronic but should be on supplier and/or manufacturer stationery (for example, letterhead, billing statement, etc.)

++ Should be for the typical, common, and customary version of the supply or equipment that is used to furnish the services.

++ Price should be net of typical rebates and/or any discounts available, including information regarding the magnitude and rationale for such rebates or discounts.

++ If multiple items are presented on the same invoice, relevant item(s) should be clearly identified.

We are soliciting public comments on this proposed process, including the information that requestors should furnish to facilitate our full analysis in preparation for the next calendar year's rulemaking cycle.

B. Malpractice Relative Value Units (RVUs)

1. Background

Section 1848(c) of the Act requires that each service paid under the PFS be comprised of three components: work, PE, and malpractice. From 1992 to 1999, malpractice RVUs were charge-based, using weighted specialty-specific malpractice expense percentages and 1991 average allowed charges. Malpractice RVUs for new codes after 1991 were extrapolated from similar existing codes or as a percentage of the corresponding work RVU. Section 4505(f) of the BBA required us to implement resource-based malpractice RVUs for services furnished beginning in 2000. Therefore, initial implementation of resource-based malpractice RVUs occurred in 2000.

The statute also requires that we review, and if necessary adjust, RVUs no less often than every 5 years. The first review and update of resource-based malpractice RVUs was addressed in the CY 2005 PFS final rule with comment period (69 FR 66263). Minor modifications to the methodology were addressed in the CY 2006 PFS final rule with comment period (70 FR 70153). In the CY 2010 PFS final rule with comment period, we implemented the second review and update of malpractice RVUs. For a discussion of the second review and update of malpractice RVUs see the CY 2010 PFS proposed rule (74 FR 33537) and final rule with comment period (74 FR 61758).

2. Malpractice RVUs for New and Revised Services Effective Before the Next 5-Year Review

Currently, malpractice RVUs for new and revised codes effective before the next 5-Year Review (for example, effective CY 2011 through CY 2014) are determined by a direct crosswalk to a similar “source” code or a modified crosswalk to account for differences in work RVUs between the new/revised code and the source code. For the modified crosswalk approach, we adjust the malpractice RVUs for the new/revised code to reflect the difference in work RVUs between the source code and the AMA RUC's recommended work value (or the work value we are applying as an interim final value under the PFS) for the new code. For example, if the interim final work RVUs for the new/revised code are 10 percent higher than the work RVUs for the source code, the malpractice RVUs for the new/revised code would be increased by 10 percent over the source code RVUs. This approach presumes the same risk factor for the new/revised code and source code but uses the work RVUs for the new/revised code to adjust for risk-of-service. The assigned malpractice RVUs for new/revised codes effective between updates remain in place until the next 5-Year Review.

We will continue our current approach for determining malpractice RVUs for new/revised codes that become effective before the next 5-Year Review and update. Under this approach we will crosswalk the new/revised code to the RVUs of a similar source code and adjust for differences in work (or, if greater, the clinical labor portion of the fully implemented PE RVUs), between the source code and the new/revised code. Additionally, we will publish a list of new/revised codes and the analytic crosswalk(s) used for determining their malpractice RVUs in the final rule with comment period, which we have not previously done. The CY 2011 malpractice RVUs for new/revised codes will be implemented as interim final values in the CY 2011 PFS final rule with comment period, where they will be subject to public comment. They will then be finalized in the CY 2012 PFS final rule with comment period.

3. Revised Malpractice RVUs for Selected Disc Arthroplasty Services

As discussed in the CY 2010 PFS proposed rule (74 FR 33539), we assign malpractice RVUs to each service based upon a weighted average of the risk factors of all specialties that furnish the service. For the CY 2010 review of malpractice RVUs, we used CY 2008 Medicare payment data on allowed services to establish the frequency of a service by specialty. CPT code 22856 (Total disc arthroplasty (artificial disc), anterior approach, including discectomy with end plate preparation (includes osteophytectomy for nerve root or spinal cord decompression and microdissection), single interspace, cervical) had zero allowed services for CY 2008. Therefore, our contractor initially set the level of services to 1, and assigned a risk factor according to the average risk factor for all services that do not explicitly have a separate technical or professional component. We proposed to adopt our contractor's initial malpractice RVUs for CPT code 22856 in the CY 2010 proposed rule. Application of the average physician risk factor would have resulted in a significant decrease in malpractice RVUs for CPT code 22856 in CY 2010.

Several commenters on the CY 2010 PFS proposed rule expressed concern regarding the proposed malpractice RVUs for CPT code 22856, which represented a proposed reduction of more than 77 percent. The commenters stated that this service is predominantly furnished by neurosurgeons and orthopedic surgeons. Given the high risk factors associated with these specialty types and the changes in malpractice RVUs for comparable services, the commenters stated that a reduction in the malpractice RVUs of this magnitude for CPT code 22856 could not be correct.

After consideration of the public comments, for CY 2010, we set the risk factor for CPT code 22856 as the weighted average risk factor of six comparable procedures mentioned by the commenters: CPT code 22554 (Arthrodesis, anterior interbody technique, including minimal discectomy to prepare interspace (other than for decompression); cervical below C2); CPT code 22558 (Arthrodesis, anterior interbody technique, including minimal discectomy to prepare interspace (other than for decompression); lumbar); CPT code 22857 (Total disc arthroplasty (artificial disc), anterior approach, including discectomy to prepare interspace (other than for decompression), single interspace, lumbar); CPT code 22845 (Anterior instrumentation; 2 to 3 vertebral segments (list separately in addition to code for primary procedure)); CPT code 63075 (Discectomy, anterior, with decompression of spinal cord and/or nerve root(s), including osteophytectomy; cervical, single interspace); and CPT code 20931 (Allograft for spine surgery only; structural (list separately in addition to code for primary procedure)). The weighted average risk factor for these services is 8.4.

Since publication of the CY 2010 PFS final rule with comment period, stakeholders have mentioned that we made significant changes to the malpractice RVUs for CPT code 22856 in CY 2010. The commenters also brought to our attention that other services are clinically similar to CPT code 22856 and have similar work RVUs, and therefore, some stakeholders believe these services should all have similar malpractice RVUs. Services mentioned by the stakeholders that are clinically similar to CPT code 22856 include CPT code 22857; CPT code 22861 (Revision including replacement of total disc arthroplasty (artificial disc), anterior approach, single interspace; cervical); CPT code 22862 (Revision including replacement of total disc arthroplasty (artificial disc) anterior approach, lumbar); CPT code 22864 (Removal of total disc arthroplasty (artificial disc), anterior approach, single interspace; cervical); and CPT code 22865 (Removal of total disc arthroplasty (artificial disc), anterior approach, single interspace; lumbar).

After further review of this issue, we are proposing to apply the same risk factor used for CPT code 22856 to certain other services within this family of services (CPT codes 22857 through 22865) for which there were no allowed services in CY 2008. CPT codes 22861 and 22864 had zero allowed services in CY 2008 and our contractor initially set their malpractice RVUs in the same way as it did for CPT code 22856. Therefore, we will assign the weighted average risk factor we use for CPT code 22856 (that is, the weighted average of the risk factors for CPT codes 20931, 22554, 22558, 22845, 22857, and 63075) to CPT codes 22861 and 22864. However, CPT codes 22857, 22862, and 22865 are low volume services (allowed services under 100). Our policy for low volume services is to apply the risk factor of the dominant specialty as indicated by our claims data. We will continue to apply our policy for low volume services to CPT codes 22857, 22862, and 22865.

C. Potentially Misvalued Services Under the Physician Fee Schedule

1. Valuing Services Under the PFS

As discussed in section I. of this proposed rule, in order to value services under the PFS, section 1848(c) of the Act requires the Secretary to determine relative values for physicians' services based on three components: the work, practice expense (PE), and malpractice components. Section 1848(c)(1)(A) of the Act defines the work component to include “the portion of the resources used in furnishing the service that reflects physician time and intensity in furnishing the service.” Additionally, the statute provides that the work component shall include activities that occur before and after direct patient contact. Furthermore, the statute specifies that with respect to surgical procedures, the valuation of the work component for the code would reflect a “global” concept in which pre-operative and post-operative physicians' services related to the procedure would also be included.

In addition, section 1848(c)(2)(C)(i) of the Act specifies that “the Secretary shall determine a number of work relative value units (RVUs) for the service based on the relative resources incorporating physician time and intensity required in furnishing the service.” As discussed in detail in sections I.A.2. and I.A.3 of this proposed rule, the statute also defines the PE and malpractice components and provides specific guidance in the calculation of the RVUs for each of these components. Section 1848(c)(1)(B) of the Act defines the PE component as “the portion of the resources used in furnishing the service that reflects the general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising practice expenses.”

Section 1848(c)(2)(C)(ii) of the Act specifies that the “Secretary shall determine a number of practice expense relative value units for the services for years beginning with 1999 based on the relative practice expense resources involved in furnishing the service.” Furthermore, section 1848(c)(2)(B) of the Act directs the Secretary to conduct a periodic review, not less often than every 5 years, of the RVUs established under the PFS. Finally, on March 23, 2010, the Affordable Care Act was enacted, further requiring the Secretary to periodically review and identify potentially misvalued codes and make appropriate adjustments to the relative values of those services identified as being potentially misvalued. Section 3134(a) of the ACA added a new section 1848(c)(2)(K) of the Act which requires the Secretary to periodically identify potentially misvalued services using certain criteria, and to review and make appropriate adjustments to the relative values for those services. Section 3134(a) of the ACA also added a new section 1848(c)(2)(L) which requires the Secretary to develop a validation process to validate the RVUs of potentially misvalued codes under the PFS and make appropriate adjustments.

As discussed in section I.A.1. of this proposed rule, we establish physician work RVUs for new and revised codes based on our review of recommendations received from the AMA RUC. The AMA RUC also provides recommendations to CMS on the values for codes that have been identified as potentially misvalued. To respond to concerns expressed by MedPAC, the Congress, and other stakeholders regarding accurate valuation of services under the PFS, the AMA RUC created the Five-Year Review Identification Workgroup. In addition to providing recommendations to CMS for work RVUs, the AMA RUC's Practice Expense Subcommittee reviews direct PE (clinical labor, medical supplies, and medical equipment) for individual services and examines the many broad and methodological issues relating to the development of PE RVUs.

In accordance with section 1848(c) of the Act, we determine appropriate adjustments to the RVUs, taking into account the recommendations provided by the AMA RUC and MedPAC, and publish the explanation for the basis of these adjustments in the PFS proposed and final rules. We note that section 1848(c)(2)(A)(ii) of the Act authorizes the use of extrapolation and other techniques to determine the RVUs for physicians' services for which specific data are not available, in addition to taking into account the results of consultations with organizations representing physicians.

2. Identifying, Reviewing, and Validating the RVUs of Potentially Misvalued Services Under the PFS

a. Background

In its March 2006 Report to Congress, MedPAC noted that “misvalued services can distort the price signals for physicians' services as well as for other health care services that physicians order, such as hospital services.” In that same report MedPAC postulated that physicians' services under the PFS can become misvalued over time for a number of reasons: “For example, when a new service is added to the physician fee schedule, it may be assigned a relatively high value because of the time, technical skill, and psychological stress that are required to perform it. Over time, skill, and stress involved may decline as physicians become more familiar with the service and more efficient at providing it. The amount of physician work needed to furnish an existing service may decrease when new technologies are incorporated. Services can also become overvalued when practice expenses decline. This can happen when the costs of equipment and supplies fall, or when equipment is used more frequently, reducing its cost per use. Likewise, services can become undervalued when physician work increases or practice expenses rise.” In the ensuing years since MedPAC's 2006 report, additional groups of potentially misvalued services have been identified by Congress, CMS, MedPAC, the AMA RUC, and other stakeholders.

In recent years CMS and the AMA RUC have taken increasingly significant steps to address potentially misvalued codes. As MedPAC noted in its March 2009 Report to Congress, in the intervening years since MedPAC made the initial recommendations, “CMS and the AMA RUC have taken several steps to improve the review process.” Most recently, section 1848(c)(2)(K)(ii) of the Act (as added by section 3134 of the ACA) directed the Secretary to specifically examine potentially misvalued services in seven categories.

(1) Codes and families of codes for which there has been the fastest growth.

(2) Codes or families of codes that have experienced substantial changes in practice expenses.

(3) Codes that are recently established for new technologies or services.

(4) Multiple codes that are frequently billed in conjunction with furnishing a single service.

(5) Codes with low relative values, particularly those that are often billed multiple times for a single treatment.

(6) Codes which have not been subject to review since the implementation of the RBRVS (the so-called ‘Harvard-valued codes').

(7) Other codes determined to be appropriate by the Secretary.

Section 1848(c)(2)(K)(iii) of the Act (as added by section 3134 of the ACA) also specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. In addition, the Secretary may conduct surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the review and appropriate adjustment of potentially misvalued services. This section authorizes the use of analytic contractors to identify and analyze potentially misvalued codes, conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of potentially misvalued services. Finally, section 1848(c)(2)(K)(iii)(V) of the Act (as added by section 3134 of the ACA) specifies that the Secretary may make appropriate coding revisions (including using existing processes for consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the physician fee schedule.

b. Progress in Identifying and Reviewing Potentially Misvalued Codes

Over the last several years, CMS, in conjunction with the AMA RUC, has identified and reviewed numerous potentially misvalued codes in all seven of the categories specified in section 1848(c)(2)(K)(ii) (as added by section 3134 of the ACA), and we plan to continue our work examining potentially misvalued codes in these areas over the upcoming years, consistent with the new legislative mandate on this issue. In the current process, the AMA RUC reviews potentially misvalued codes that are identified either by CMS or through its own processes and recommends revised work RVUs and/or direct PE inputs for those codes to CMS. CMS then assesses the recommended revised work RVUs and/or direct PE inputs and, in accordance with section 1848(c) of the Act, we determine if the recommendations constitute appropriate adjustments to the RVUs under the PFS. Since CY 2009, CMS and the AMA RUC have identified over 700 potentially misvalued codes.

For example, in regards to the first category (codes and families of codes for which there has been the fastest growth), for CY 2009 CMS identified over 100 potentially misvalued codes for which an analysis of the utilization data showed an annual growth in allowed services of 10 percent (or more) for 3 consecutive years (73 FR 38586). Each of these codes had allowed charges of $1 million or more in CY 2007. We published this list in the CY 2009 proposed rule (73 FR 38586 through 38589) and requested that the AMA RUC immediately begin a review of the codes on this list. Meanwhile, in parallel with CMS' efforts, the AMA RUC also initiated processes to identify and review potentially misvalued codes on an ongoing basis using certain screens, including screens for “CMS fastest growing procedures” and “high volume growth.” Both of these AMA RUC screens are applicable to the first category of potentially misvalued codes specified in ACA. We plan to continue to analyze Medicare claims data over future years to identify additional services that exhibit rapid growth and high Medicare expenditures for referral to the AMA RUC for review as potentially misvalued codes.

Pertaining to the second category specified in section 1848(c)(2)(K)(ii) of the Act (as added by section 3134 of ACA) (codes or families of codes that have experienced substantial changes in practice expenses), in CY 2009 we requested that the AMA RUC continue its review of direct PE inputs, focusing particularly on high-volume codes where the PE payments are increasing significantly under the transition to the new PE methodology (73 FR 38589). The AMA RUC has responded by sending CMS recommendations for revised direct PE inputs for codes identified for PE review on an ongoing basis.

Additionally in CY 2009, we began an initiative to review and update the prices for high-cost supplies in order to ensure the accuracy and completeness of the direct PE inputs. We discuss our most recent efforts in refining the process to update the prices of high-cost supplies in section II.C.5. of this proposed rule.

For the third category of potentially misvalued codes identified in section 1848(c)(2)(K)(ii) (as added by section 3134 of the ACA) (codes that are recently established for new technologies or services), the AMA RUC routinely identifies such codes through a screen based on 3 years of Medicare claims data, and sends CMS recommendations for revised work RVUs and/or direct PE inputs for these codes on an ongoing basis. The AMA RUC may determine that a code for a new service requires reevaluation or does not require reevaluation, or it may conclude, on a case-by-case basis, that more than 3 years of claims data are necessary before the code can be reviewed. In that case, it would determine the appropriate future timeframe for review.

We also note that in its June 2008 Report to Congress entitled “Reforming the Health Care System” and in the context of a discussion about primary care, MedPAC acknowledges, “* * * Efficiency can improve more easily for other types of services, such as procedures, with advances in technology, technique, and other factors. Ideally, when such efficiency gains are achieved, the fee schedule's relative value units (RVUs) for the affected services should decline accordingly, while budget neutrality would raise the RVUs for the fee schedule's primary care services.” (page 27). Section III.C.5. of this proposed rule includes a discussion regarding periodic updates to the costs of high cost supplies. This discussion is highly relevant to new technology services, where growth in volume of a service as it diffuses into clinical practice may lead to a decrease in the cost of expensive supplies. We also expect that other efficiencies in physician work and PE may be achieved after an initial period of relative inefficiency that reflects the “learning curve.” We plan to pay particular attention to the work values and direct PE inputs for these new services and the AMA RUC's periodic review process to ensure that any efficiencies are captured under the PFS over time, recognizing that the appropriate timing for revaluing these services needs to be considered on a case-by-case basis depending on the growth rate in service volume.

We have also addressed the fourth category (multiple codes that are frequently billed in conjunction with furnishing a single service) in rulemaking prior to the enactment of the ACA. As discussed in the CY 2009 PFS proposed rule (73 FR 38586), we have a longstanding policy of reducing payment for multiple surgical procedures performed on the same patient, by the same physician, on the same day. Over the ensuing years, the multiple procedure payment reduction (MPPR) policy has been extended to a number of nuclear diagnostic and diagnostic imaging procedures. We continue our work to recognize efficiencies in this area with a proposal to expand the MPPR policy to additional combinations of imaging services and to therapy services for CY 2011 as described in section II.C.4. of this proposed rule.

We note the AMA RUC has also established a screen to identify services performed by the same physician on the same date of service 95 percent of the time or more. Over the past 2 years, the CPT Editorial Panel has established new bundled codes to describe a comprehensive service for certain combinations of these existing services that are commonly furnished together, and the AMA RUC has recommended work values and direct PE inputs to CMS for these comprehensive service codes that recognize the associated efficiencies. CMS looks forward to working with the AMA RUC in this joint effort to examine codes commonly reported together and more appropriately value common combinations services.

We address the fifth category of potentially misvalued codes (codes with low relative values, particularly those that are often billed multiple times for a single treatment) in section II.C.3.b. of this proposed rule. That is, we are providing a list of services with low work RVUs that are commonly reported with multiple units in a single encounter and requesting that the AMA RUC review these codes that we have identified as potentially misvalued.

The sixth category (codes which have not been subject to review since the implementation of the RBRVS (the so-called ‘Harvard-valued codes’)) also continues to be addressed by CMS and the AMA RUC on an ongoing basis. As we noted in the CY 2009 PFS proposed rule (73 FR 38589), there were at that time approximately 2900 codes, representing $5 billion in annual spending, that were originally valued using Harvard data and have not subsequently been evaluated by the AMA RUC. Consequently, in CY 2009, we requested that the AMA RUC engage in an ongoing effort to review the remaining Harvard-valued codes, focusing first on the high-volume, low intensity codes (73 FR 38589). In response to our request, the AMA RUC initially conducted an analysis of Harvard-valued services with utilization above 10,000 services per year, which resulted in a list of 296 distinct services (73 FR 69883). The AMA RUC, in its public comment on the CY 2009 proposed rule, stated that it believes it would be effective to limit any review to these 296 services and also noted that of the 296 services identified, 23 had already been identified by another screen and were in the process of being reviewed (73 FR 69883). To date, the AMA RUC has reviewed and submitted to CMS recommendations for revised work RVUs and/or direct PE inputs for a number of Harvard-valued codes, prioritizing those codes with utilization of over 1 million services. The AMA RUC and CMS intend to continue our ongoing assessment of Harvard-valued codes, next targeting codes with utilization of over 100,000 services.

Finally, the seventh category of potentially misvalued codes mentioned in section 1848(c)(2)(K)(ii) (as added by section 3134 of the ACA) is all other codes determined to be appropriate by the Secretary. In this category, CMS has previously proposed policies and requested that the AMA RUC review codes for which there have been shifts in the site-of-service (site-of-service anomalies), as well as codes that qualify as “23-hour stay” outpatient services. The policies for valuation of both the site-of-service anomaly codes and the “23-hour stay” codes are developed further in sections II.C.3.d. and e., respectively, of this proposed rule. For CY 2011, we are also identifying codes with low work RVUs but are high volume based on claims data as another category of potentially misvalued codes and are referring these codes to the AMA RUC for review, as discussed in section II.C.3.b. of this proposed rule. In addition, for CY 2011 we are newly targeting key codes that the AMA RUC uses as reference services for valuing other services, termed “multispecialty points of comparison” services, and referring these to the AMA RUC for review as potentially misvalued codes as described in section II.C.3.a. of this proposed rule. Finally, we note the AMA RUC has also established screens to identify potentially misvalued codes in additional categories, including codes with a high intra-service work per unit of time (IWPUT) and codes representing services that had been surveyed by one specialty, but are now performed by a different specialty. We will continue to review AMA RUC recommendations for revised work RVUs and/or direct PE inputs for codes that fall into these categories.

As a result of the combined efforts of CMS and the AMA RUC to address potentially misvalued codes, for CY 2009 the AMA RUC recommended revised work values and/or PE inputs for 204 misvalued services (73 FR 69883). For CY 2010, an additional 113 codes were identified as misvalued and the AMA RUC provided new recommendations for revised work RVUs and/or PE inputs to CMS as discussed in the CY 2010 PFS final rule with comment period (74 FR 61778). Upon review of the AMA RUC-recommended work RVUs, CMS accepted the majority of the values as appropriate adjustments to the RVUs under the PFS, in accordance with section 1848(c) of the Act. However, for a number of codes, mainly the site-of-service anomaly codes, we indicated that although we would accept the AMA RUC valuations for these site-of-service anomaly codes on an interim basis through CY 2010, we had ongoing concerns about the methodology used by the AMA RUC to review these services (73 FR 69883 and 74 FR 61776 through 61778, respectively). In the CY 2010 PFS final rule with comment period, we requested that the AMA RUC reexamine the site-of-service anomaly codes and use the building block methodology to revalue the services (74 FR 61777). In that same rule, we also stated that we would continue to examine these codes and consider whether it would be appropriate to propose additional changes in future rulemaking. We discuss our CY 2011 proposal with respect to these codes in section II.C.3.d. of this proposed rule.

c. Validating RVUs of Potentially Misvalued Codes

In addition to identifying and reviewing potentially misvalued codes, section 1848(c)(2)(L) (as added by section 3134 of the ACA) specifies that the Secretary shall establish a formal process to validate relative value units under the PFS. The validation process may include validation of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, and stress due to risk) involved with furnishing a service and may include validation of the pre, post, and intra-service components of work. The Secretary is directed to validate a sampling of the work RVUs of codes identified through any of the seven categories of potentially misvalued codes specified by section 1848(c)(2)(K)(ii) (as added by section 3134 of the ACA). Furthermore, the Secretary may conduct the validation using methods similar to those used to review potentially misvalued codes, including conducting surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the validation of RVUs of services. Currently, while CMS does assess the AMA RUC- recommended work RVUs to determine if the recommendations constitute appropriate adjustments to the RVUs under the PFS, we intend to establish a more extensive validation process of RVUs in the future in accordance with the requirements of section 1848(c)(2)(L) (as added by section 3134 of the ACA). Therefore, we are soliciting public comments on this proposed rule on possible approaches and methodologies that we should consider for a validation process. We are especially interested in public comments regarding approaches, including the use of time and motion studies, to validate estimates of physician time and intensity that are factored into the work RVUs for services with rapid growth in Medicare expenditures, one of the categories that the statute specifically directs CMS to examine. We plan to discuss the validation process in a future PFS rule once we have considered the matter further in conjunction with any public comments and other input from stakeholders that we receive.

3. CY 2011 Identification and Review of Potentially Misvalued Services

In this section, we discuss codes that may be misvalued according to five different criteria:

  • Codes on the multi-specialty points of comparison list;
  • Codes with low work RVUs commonly billed in multiple units per single encounter;
  • Codes with high volume and low work RVUs;
  • Codes with site-of-service anomalies; and
  • Codes that qualify as “23-hour stay” outpatient services.

a. Codes on the Multispecialty Points of Comparison List

The AMA RUC uses a scale referred to as the multispecialty points of comparison (MPC) to evaluate the reasonableness of a specialty society's recommended RVU value for a service. The MPC list contains reference codes of established comparison services that are used in the valuation of new codes. The current MPC list consists of 316 codes which the AMA RUC may use to compare and contrast the relativity of codes under review to existing relative values. Since the AMA RUC may use the values on the MPC list as a basis for relativity when determining the values for new, revised, and newly reviewed codes (including potentially misvalued codes), it is essential that the services on the MPC list be appropriately valued since any codes misvalued on the MPC list could contribute to the misvaluing of other codes under review. While we believe that the entire MPC list should be assessed to ensure that services are paid appropriately under the PFS, we have prioritized the review of the MPC list, ranking the codes by allowed service units and charges based on CY 2009 claims data. We are proposing to refer the codes in Table 9 to the AMA RUC for review.

Table 9—Codes on the MPC List Referred for AMA RUC Review Back to Top
CPT Code Short descriptor
66984 Cataract surg w/iol, 1 stage.
97110 Therapeutic exercises.
43239 Upper GI endoscopy, biopsy.
20610 Drain/inject, joint/bursa.
78815 Pet image w/ct, skull-thigh.
45385 Lesion removal colonoscopy.
45380 Colonoscopy and biopsy.
11721 Debride nail, 6 or more.
17000 Destruct premalg lesion.
92980 Insert intracoronary stent.
74160 Ct abdomen w/dye.
71020 Chest x-ray.
11100 Biopsy, skin lesion.
66821 After cataract laser surgery.
52000 Cystoscopy.
92083 Visual field examination(s).
73721 Mri jnt of lwr extre w/o dye.
93010 Electrocardiogram report.
77334 Radiation treatment aid(s).
92250 Eye exam with photos.
95810 Polysomnography, 4 or more.
77003 Fluoroguide for spine inject.
11056 Trim skin lesions, 2 to 4.
76700 Us exam, abdom, complete.
77290 Set radiation therapy field.
77300 Radiation therapy dose plan.
43235 Uppr gi endoscopy, diagnosis.
71275 Ct angiography, chest.
95900 Motor nerve conduction test.
31231 Nasal endoscopy, dx.
95165 Antigen therapy services.
94060 Evaluation of wheezing.
31575 Diagnostic laryngoscopy.

b. Codes With Low Work RVUs Commonly Billed in Multiple Units per Single Encounter

Consistent with section 1848(c)(2)(K)(ii) (as added by section 3134 of the ACA) which identifies categories of potentially misvalued codes for our review, we believe services with low work RVUs that are commonly billed with multiple units in a single encounter are an additional appropriate category for identifying potentially misvalued codes. An example of a high multiple/low work RVU service is CPT code 95004 (Percutaneous tests (scratch, puncture, prick) with allergenic extracts, immediate type reaction, including test interpretation and report by a physician, specify number of tests). For purposes of compiling a list of the high multiple/low work RVU services, we defined a high multiple service as one that is commonly performed in multiples of 5 or more per day. Then, we selected from high multiple services with work RVUs of less than or equal to 0.5 RVUs. We note that in selecting 5 per day as the minimum threshold for the number of common services performed in a multiple service encounter, we intended to establish a meaningful threshold which, in conjunction with the threshold for work RVUs of 0.5 RVUs or less, would produce a reasonable number of services for the RUC to review that have substantial total work RVUs for the comprehensive service furnished during a single treatment. That is, as a general example, with a work RVU threshold of 0.5 RVUs and a multiple threshold of 5 per day, the total work RVUs for a typical treatment would equate to 2.5 RVUs, which is approximately comparable to a high level office visit, an interpretation of a complex imaging procedure, or a minor surgical procedure.

We are asking the AMA RUC to review the codes in Table 10.

Table 10—Codes With Low Work RVUs That Are Commonly Billed in Multiple Units Referred for AMA RUC Review Back to Top
CPT Code Short descriptor
95904 Sense nerve conduction test.
17003 Destruct premalg les, 2-14.
95004 Percut allergy skin tests.
11101 Biopsy, skin add-on.
95024 Id allergy test, drug/bug.
76000 Fluoroscope examination.
95144 Antigen therapy services.
95010 Percut allergy titrate test.
88300 Surgical path, gross.
95027 Id allergy titrate-airborne.
95015 Id allergy titrate-drug/bug.
95148 Antigen therapy services.

c. Codes With High Volume and Low Work RVUs

We believe that codes that have low work RVUs but are high volume based on claims data are another category of potentially misvalued codes. Although these codes have low work RVUs (less than or equal to 0.25 RVUs), the high utilization of these codes represents significant expenditures under the PFS such that their appropriate valuation is especially important. Table 11 contains a list of such codes and we are requesting that the AMA RUC review these codes.

Table 11—Codes With Low Work RVUs That Are High Volume Referred for AMA RUC Review Back to Top
CPT Code Short descriptor
71010 Chest x-ray.
73510 X-ray exam of hip.
97035 Ultrasound therapy.
88313 Special stains group 2.
73630 X-ray exam of foot.
72100 X-ray exam of lower spine.
73030 X-ray exam of shoulder.
73562 X-ray exam of knee, 3.
73560 X-ray exam of knee, 1 or 2.
94010 Breathing capacity test.
77052 Comp screen mammogram add-on.
88304 Tissue exam by pathologist.
73564 X-ray exam, knee, 4 or more.
72170 X-ray exam of pelvis.
74000 X-ray exam of abdomen.
73610 X-ray exam of ankle.
11719 Trim nail(s).
73620 X-ray exam of foot.
92567 Tympanometry.
73110 X-ray exam of wrist.
73130 X-ray exam of hand.
93701 Bioimpedance, cv analysis.
72040 X-ray exam of neck, spine.
92543 Caloric vestibular test

d. Codes With Site-of-Service Anomalies

In previous years, we requested that the AMA RUC review codes that, according to the Medicare claims database, have experienced a change in the typical site of service since the original valuation of the code. For example, we have found services that originally were provided in the inpatient setting but for which current claims data show the typical case has shifted to being furnished outside the inpatient setting. Since the procedures were typically performed in the inpatient setting when the codes were originally valued, the work RVUs for these codes would have been valued to include the inpatient physician work provided, as well as to reflect the intensive care and follow-up normally associated with an inpatient procedure. If the typical case for the procedure has shifted from the inpatient setting to an outpatient or physician's office setting, it is reasonable to expect that there have been changes in medical practice, and that such changes would represent a decrease in physician time or intensity or both. The AMA RUC reviewed and recommended to CMS revised work RVUs for 29 codes for CY 2009 and 11 codes for CY 2010 that were identified as having site-of-service anomalies.

In the CY 2010 PFS proposed and final rules with comment period (74 FR 33556 and 74 FR 61777, respectively), we encouraged the AMA RUC to utilize the building block methodology when revaluing services with site-of-service anomalies. Specifically, where the AMA RUC has determined in its review that changes in the inclusion of inpatient hospital days, office visits, and hospital discharge day management services (that is, the “building blocks” of the code) are warranted in the revaluation of the code, we asked the AMA RUC to adjust the site-of-service anomaly code for the work RVUs associated with those changes.

Additionally, we suggested that in cases where the AMA RUC has adjusted the pre-service, intra-service and post-service times of the code under review, the AMA RUC should also make associated work RVU adjustments to account for those changes. However, we remain concerned that in the AMA RUC's recommendations of the work RVUs for the CYs 2009 and 2010 site-of-service anomaly codes, the AMA RUC may have determined that eliminating or reallocating pre-service and post-service times, hospital days, office visits, and hospital discharge day management services was appropriate to reflect the typical case that is now occurring in a different setting, but the work RVUs associated with those changes may not have been systematically extracted or reallocated from the total work RVU value for the service.

In the CYs 2009 and 2010 PFS final rules with comment period (73 FR 69883 and 74 FR 61776 through 61778, respectively), we indicated that although we would accept the AMA RUC valuations for these site-of-service anomaly codes on an interim basis through CY 2010, we had ongoing concerns about the methodology used by the AMA RUC to review these services. We requested that the RUC reexamine the site-of-service anomaly codes and use the building block methodology to revalue the services (74 FR 61777). We also stated that we would continue to examine these codes and consider whether it would be appropriate to propose additional changes in future rulemaking.

Accordingly, in preparation for CY 2011 rulemaking, we conducted a comprehensive analysis of the codes that the AMA RUC reviewed for CYs 2009 and 2010 due to site-of-service anomaly concerns. We systematically applied the reverse building block methodology to the 29 codes from CY 2009 and 11 codes from CY 2010 as follows:

  • First, we obtained the original work RVU value assigned to the code (this is the “starting value”) and made a list of the building block services with RVUs that were originally associated with the code (that is, before the AMA RUC reviewed the code for site-of-service anomalies).
  • Next, we examined the AMA RUC-recommended changes to the building blocks of the code.
  • We then deducted the RVUs associated with the AMA RUC's recommended eliminations from the code's starting RVU value.

Generally, the AMA RUC eliminated inpatient hospital visit building blocks from the value of the code since the site-of-service for the code has shifted from the inpatient setting to another setting. We note in some cases, the AMA RUC left an inpatient hospital visit in the valuation of the code. We believe this is inconsistent with the change in the site of service to non-inpatient settings. Accordingly, we adhered to the methodology and deducted the RVUs associated with all inpatient hospital visits from the starting value. In cases where the AMA RUC recommended adding or substituting outpatient visits, we also added or substituted the RVUs associated with those changes to the starting value. If the AMA RUC recommended changes to the pre-, intra-, or post-service times, we calculated the incremental change in RVUs associated with that time and either added or deducted that RVU amount from the starting value. We note that the RVU values associated with the incremental time change are calculated using the intensity associated with the particular pre-, intra-, or post period. For the intensity of the intra-service period, we utilized the original IWPUT associated with the code. The AMA RUC generally recommended allowing only half of a hospital discharge day management service for the site-of-service anomaly codes. That is, CPT code 99238 (Hospital discharge day management; 30 minutes or less) has a work RVU value of 1.28; therefore, half the value associated with CPT code 99238 is 0.64. Accordingly, if a code had one CPT code 99238 listed as part of the original valuation, we deducted 0.64 RVUs from the starting value.

We standardized the methodology so that each of the site-of-service anomaly codes has half of a hospital discharge day management service value accounted in the valuation. Finally, we note that while we eliminated the RVUs associated with all inpatient hospital visits built into the code's starting value, because the typical case no longer occurs in the inpatient setting, we allowed for the possibility that in some cases, some part of the work which had been performed in the inpatient setting may continue to be provided even in the outpatient setting. Therefore, to be conservative in our deductions of work RVUs associated with the inpatient hospital codes from the starting values, we allowed the intra-time of any inpatient hospital visits included in the original valuation to migrate to the post-service period of the code. Accordingly, while we deducted the full RVUs of an inpatient hospital visit from the starting value, we added the intra-service time of the inpatient hospital visit to the post-service time of the code and accounted for the incremental change in RVUs. The following description provides an example of our methodology.

CPT code 21025 (Excision of bone (e.g., for osteomyelitis or bone abscess); mandible) has a starting value of 11.07 RVUs. Table 12 shows the building blocks that are included in the original valuation of the code.

Table 12 Back to Top
Pre-service time Median intra-service time Immediate post-service time 99231 99232 99238 99211 99212 99213 Original IWPUT
75 min 120 min 43 min 1 visit (0.76 RVUs) 1 visit (1.39 RVUs) 1 visit (1.28 RVUs) 2 visits (0.36 RVUs) 2 visits (0.96 RVUs) 2 visits (1.94 RVUs) 0.0145

The AMA RUC removed two inpatient hospital visits and reduced the outpatient visits from 6 to 4 visits. Table 13 shows the building blocks that were recommended for CY 2009 by the AMA RUC after its review of the code for site-of-service anomalies.

Table 13 Back to Top
Pre-service time Median intra-service time Immediate post-service time 99231 99232 99238 99211 99212 99213 Revised IWPUT
85 min 90 min 30 min 2 visits 2 visits 0.0530

Next we calculated the RVUs associated with the changes to the building blocks recommended by the AMA RUC. We note that the immediate post-service value of 0.38 RVUs (Table 14) includes 30 minutes of intra-service time from inpatient hospital CPT code 99231 (Level 1 subsequent hospital care, per day). Also, the median intra-service value of 0.44 RVUs (Table 14) was determined using the starting IWPUT value of 0.0145. Additionally, our methodology accounted for a half of a hospital discharge day management service (CPT code 99238) for the site-of-service anomaly code. Table 14 shows the RVU changes to the building blocks that were calculated based on the methodology discussed above.

Table 14 Back to Top
Pre-service time Median intra-service time Immediate post-service time 99231 99232 99238 99211 99212 99213
0.22 RVUs −0.44 RVUs 0.38 RVUs −0.76 RVUs −1.39 RVUs −0.64 RVUs −0.36 RVUs    

In the final step, the RVUs associated with the changes to the building blocks recommended by the AMA RUC (Table 14) were deducted from or added to the starting value of 11.07 RVUs, which resulted in the CY 2011 reverse building block value of 8.08 RVUs (11.07+0.22−0.44+0.38−0.76−1.39−0.64−0.36=8.08).

The methodology discussed above was applied to each of the site-of-service anomaly codes from CYs 2009 and 2010 and the results are summarized in Tables 15 and 16.

Table 15—CY 2009 Site-of-Service Anomaly Codes1 Back to Top
CPT code Short descriptor CY 2008 RVUs (“starting value”) RUC Recommended value for CY 2009 CY 2011 Reverse building block value
1We note that in this table, we have not adjusted the RVUs for these codes for the RVU changes to the evaluation and management codes that resulted from the CY 2010 elimination of the consultation codes (74 FR 61775). However, we note that we may, if appropriate, adjust the RVUs for services with global periods to account for relevant changes in the RVUs for evaluation and management services as necessary.
21025 Excision of bone, lower jaw 11.07 9.87 8.09
23415 Release of shoulder ligament 10.09 9.07 10.63
25116 Remove wrist/forearm lesion 7.38 7.38 7.21
42440 Excise submaxillary gland 7.05 7.05 6.52
52341 Cysto w/ureter stricture tx 6.11 5.35 5.62
52342 Cysto w/up stricture tx 6.61 5.85 6.20
52343 Cysto w/renal stricture tx 7.31 6.55 5.90
52344 Cysto/uretero, stricture tx 7.81 7.05 5.58
52345 Cysto/uretero w/up stricture 8.31 7.55 5.76
52346 Cystouretero w/renal strict 9.34 8.58 6.05
52400 Cystouretero w/congen repr 10.06 8.66 7.00
52500 Revision of bladder neck 9.39 7.99 8.72
52640 Relieve bladder contracture 6.89 4.73 5.01
53445 Insert uro/ves nck sphincter 15.21 15.21 11.72
54410 Remove/replace penis prosth 16.48 15.00 14.00
54530 Removal of testis 9.31 8.35 8.88
57287 Revise/remove sling repair 11.49 10.97 10.20
62263 Epidural lysis mult sessions 6.41 6.41 6.99
62350 Implant spinal canal cath 8.04 6.00 0.41
62355 Remove spinal canal catheter 6.60 4.35 -0.43
62360 Insert spine infusion device 3.68 4.28 -3.14
62361 Implant spine infusion pump 6.59 5.60 -0.92
62362 Implant spine infusion pump 8.58 6.05 -0.51
62365 Remove spine infusion device 6.57 4.60 -0.35
63650 Implant neuroelectrodes 7.57 7.15 4.25
63685 Insrt/redo spine n generator 7.87 6.00 4.80
64708 Revise arm/leg nerve 6.22 6.22 6.17
64831 Repair of digit nerve 10.23 9.00 8.87
65285 Repair of eye wound 14.43 14.43 13.52
Table 16—CY 2010 Site-of-Service Anomaly Codes2 Back to Top
CPT code Short descriptor CY 2009 RVUs (“starting value”) RUC Recommended value for CY 2010 CY 2011 Reverse building block value
2We note that in this table, we have not adjusted the RVUs for these codes for the RVU changes to the evaluation and management codes that resulted from the CY 2010 elimination of the consultation codes (74 FR 61775). However, we note that we may, if appropriate, adjust the RVUs for services with global periods to account for relevant changes in the RVUs for evaluation and management services as necessary.
28120 Part removal of ankle/heel 5.64 8.08 6.03
28122 Partial removal of foot bone 7.56 7.56 6.79
28725 Fusion of foot bones 11.97 11.97 12.41
28730 Fusion of foot bones 12.21 12.21 10.06
36825 Artery-vein autograft 10.00 15 13.12
42415 Excise parotid gland/lesion 17.99 17.99 15.17
42420 Excise parotid gland/lesion 20.87 20.87 17.80
49507 Prp i/hern init block >5 yr 9.97 9.97 9.37
49521 Rerepairing hernia, blocked 12.36 12.36 11.59
49587 Rpr umbil hern, block > 5 yr 7.96 7.96 7.19
61885 Insrt/redo neurostim 1 array 7.37 7.57 3.22

For most codes in Tables 15 and 16, the CY 2011 reverse building block methodology produced a value that is somewhat lower than the AMA RUC-recommended value. While our results suggest that the majority of the codes with site-of-service anomalies continue to be overvalued under the AMA RUC's most recent recommendations, we also found that the methodology may produce a result that is considerably reduced or, in several cases, a negative value. We understand that in previous years, stakeholders have expressed confusion as to why the application of a building block methodology would produce negative values. We believe in some cases, the starting value, that is, the original work RVU, may have been misvalued using building block inputs that were not consistent with the service, although the overall work value of the code may have been consistent with the values for other similar services. Moreover, a number of these services are the Harvard-valued codes, for which the RVUs were established many years ago based on historical inputs that may no longer be appropriate for the code. An attempt to extract the RVUs associated with these inappropriate inputs through the reverse building block methodology could produce aberrant results. Furthermore, in some cases, we noticed that the original IWPUT of the code was negative even before the code was reviewed by the AMA RUC for a site-of-service anomaly. A negative value for the IWPUT is counterintuitive to the IWPUT concept, indicating that the code was originally misvalued at the building block level. At a minimum, we believe that in cases where the reverse building block methodology produces aberrant results, and where clinical review indicates a need for further analysis, the codes should be referred back to the AMA RUC for review and new valuation should be performed based on the building block methodology.

We note the application of the reverse building block methodology is an objective way to account for changes in the resources resulting from the change in the site-of-service in which the typical service is provided. However, because relative values under the PFS are “relative,” that is, where work relative value units for a code are established relative to work relative value units for other codes, the recommended methodology of valuing services based on input building blocks is best applied within the context of the AMA RUC discussion. For example, we recognize that the AMA RUC looks at families of codes and may assign RVUs based on a particular code ranking within the family. This method of valuing services preserves relativity within the relative value scale for that code family. However, we have stated that we believe the relative value scale requires each service to be valued based on the resources used in furnishing the service as specified in section 1848(c)(1)(A) of the Act, which defines the physician work component to include “the portion of the resources used in furnishing the service that reflects physician time and intensity in furnishing the service.” Furthermore, section 1848(c)(2)(C)(i) of the Act specifies that “the Secretary shall determine a number of work relative value units (RVUs) for the service based on the relative resources incorporating physician time and intensity required in furnishing the service.” Read together, these two sections of the statute support our intention to rely on the building block methodology to determine appropriate work RVUs for codes.

We note that we continue to rely on the extensive expertise provided by the AMA RUC to recommend appropriate input building blocks for codes. Additionally, the AMA RUC's unique infrastructure and broad perspective permits the valuation of a code within the context of relativity to the entire relative value system. Therefore, we believe that the recommended methodology of valuing services based on input building blocks is best applied within the context of the AMA RUC discussion.

Accordingly, we are requesting that the AMA RUC review the CPT codes displayed in Tables 15 and 16. In addition, where the application of the CY 2011 reverse building block methodology produces an aberrant result that is clearly not a reflection of physician work for the service, we are requesting that the AMA RUC review the input building blocks and recommend an appropriate RVU value that is both consistent with the building blocks of the code and appropriate relative to the values for other codes in the family. For other codes where the application of the CY 2011 reverse building block methodology produces a result that is consistent with the physician work for the service, we encourage the AMA RUC to confirm the values and recommend these work values for CY 2011. In this way, we would hope to receive new AMA RUC recommendations for all of the codes in Tables 15 and 16 for CY 2011. Furthermore, if the recommendations that we receive from the AMA RUC are not consistent with the building block methodology and not appropriate relative to the values of other services, and the application of the CY 2011 reverse building block methodology produces a result that CMS medical advisors believe is consistent with the work for the service, we are proposing to adopt the CY 2011 reverse building block methodology values that are listed in Tables 15 and 16 for CY 2011. In cases where the reverse building block methodology produces a negative work value, we are suggesting that the AMA RUC review and revise the building blocks of the code so that a new valuation can be determined based on the building block methodology. For such codes, if the revised recommendations that we would hope to receive from the AMA RUC are still not consistent with the building block methodology upon revision, because we cannot pay for these services based on negative work RVUs, we are proposing to modify the AMA RUC-recommended values for these codes as CMS determines clinically appropriate and adopt the CMS-modified RVUs on a interim final basis for CY 2011.

In their future work, we urge the AMA RUC to use the building block methodology when valuing services or provide CMS with extensive rationale for cases where the AMA RUC believes the building block methodology is inappropriate for a specific code. Since section 1848(c)(2)(L) (as added by section 3134 of the ACA) specifies that the Secretary shall establish a process to validate work RVUs of potentially misvalued codes under the PFS, as we have discussed earlier in this section, we believe codes that are valued using the building block methodology would be more likely to meet the standards of a systematic RVU validation process that could be developed in accordance with the requirements of the statute.

e. Codes With “23-hour” Stays

In the CY 2010 PFS proposed rule (74 FR 33557), we requested that the AMA RUC review services that are typically performed in the outpatient setting and require a hospital stay of less than 24 hours. We stated in the proposed rule that we believed these to be primarily outpatient services and expressed concern that the value of evaluation and management (E/M) visits for inpatients was inappropriately included in the valuation of codes that qualify as “23-hour stay” outpatient services.

We received a number of comments in response to the discussion in the CY 2010 proposed rule. The AMA RUC stated that it already values stays of less than 23 hours appropriately by reducing the hospital discharge day management service (that is, CPT code 99238), from 1 day to a half day. The AMA RUC also explained that when the AMA RUC refers to 23-hour stay services in discussions at AMA RUC meetings, it is referring primarily to services that are reported in the Medicare claims database as typically outpatient services, but where the patient is kept overnight and, on occasion, even longer in the hospital. Because the AMA RUC believes the patient stays overnight in the hospital, it believes the inclusion of inpatient E/M visits to be appropriate in the valuation of this category of codes.

We believe that the 23-hour stay issue encompasses several scenarios. The typical patient is commonly in the hospital for less than 24 hours, which often means the patient may indeed stay overnight in the hospital. On occasion, the patient may stay longer than a single night in the hospital; however, in both cases, the patient is considered for Medicare purposes to be a hospital outpatient, not an inpatient, and our claims data support that the typical 23-hour stay service is billed as an outpatient service. Accordingly, we believe that the valuation of the codes that fall into the 23-hour stay category should not reflect work that is typically associated with an inpatient service. For example, inpatient E/M visit codes such as CPT codes 99231 (Level 1 subsequent hospital care, per day); 99232 (Level 2 subsequent hospital care, per day); and 99233 (Level 3 subsequent hospital care, per day), should not be included at the full value in the valuation of 23-hour stay services.

Currently, the valuation of 23-hour stay services is conducted in a nonuniform manner by the AMA RUC. The AMA RUC has indicated that it currently includes a half hospital discharge day management service and no hospital inpatient visits for outpatient services with expected hospital stays of 23 hours or less. In contrast, for those outpatient services where the AMA RUC believes that the recovery period could be longer than 23 hours, the AMA RUC stated in its comment on the CY 2010 PFS proposed rule that it currently includes a full hospital discharge day management service and one or more inpatient E/M visits in the code's value. However, we note the typical 23-hour stay service is billed as an outpatient service and so long as the typical case continues to be billed as an outpatient service, we believe the code should not incorporate physician work values for services that are typically associated with an inpatient service. In the 2010 PFS proposed and final rule with comment period (74 FR 33556 and 74 FR 61777, respectively), we stated that we believed the use of inpatient E/M visit codes for services rendered in the post-service period for outpatient 23-hour stay procedures would result in overpayment for pre- and post-service work that would not be provided. Accordingly, we proposed in the CY 2010 proposed rule (74 FR 33556 through 33557) not to allow any additional inpatient E/M service to be billed for care furnished during the post-procedure period when care is furnished for an outpatient service requiring less than a 24-hour hospital stay.

However, we find it is plausible that while the patient receiving the 23-hour stay service remains a hospital outpatient, the patient would typically be cared for by the physician furnishing the procedure during that post-procedure period. While we do not believe that post-procedure hospital “visits” would be at the inpatient level since the typical case is an outpatient who would be ready to be discharged from the hospital in 23 hours or less, we agree that the intra-service time of the inpatient hospital visit may be included in the valuation for the 23-hour stay code.

Accordingly, we are modifying our proposed CY 2010 approach and suggesting that in the future, when the AMA RUC reviews new and potentially misvalued codes that are identified as 23-hour stay services, the AMA RUC would apply the following methodology:

(1) Begin with the starting RVU value of the 23-hour stay code under review and decrease the hospital discharge day management service from one day to a half day.

(2) Deduct the RVUs of inpatient hospital visits from the starting RVU value.

(3) Reallocate the time associated with the intra-service portion of the inpatient hospital visits to the immediate post-service time of the 23-hour stay code under review.

Example: A 23-hour stay code is currently valued at 15 RVUs and has 1 hospital discharge day management service and 1 level 3 subsequent hospital care visit incorporated in this value.

  • Applying step (1): 15−0.64 [*] = 14.36
  • Applying step (2): 14.36−2 [**] = 12.36
  • Applying step (3): 12.36 + (30 minutes × 0.0224) [***] = 13.032 RVUs

[*] Value associated with1/2hospital discharge day management service.

[**] Value associated with an inpatient hospital visit, CPT code 99233.

[***] Value associated with the reallocated intra-service time multiplied by the post-service intensity of the 23-hour stay code.

Finally, we note that since work relative value units are established by the Secretary in the context of relativity to other codes in the system, the recommended methodology for the evaluation of 23-hour stay codes is best applied within the context of relativity. We appreciate that the AMA RUC has the ability to assess the 23-hour stay code after application of the recommended methodology to ensure appropriate relativity of this code and other codes within the system. We strongly encourage the AMA RUC to apply the recommended methodology to ensure the consistent and appropriate valuation of the physician work for these services.

4. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy to Additional Nonsurgical Services

a. Background

Medicare has a longstanding policy to reduce payment by 50 percent for the second and subsequent surgical procedures furnished to the same patient by the same physician on the same day, largely based on the presence of efficiencies in the PE and pre- and post-surgical physician work. Effective January 1, 1995, the multiple procedure payment reduction (MPPR) policy, with the same percentage reduction, was extended to nuclear medicine diagnostic procedures (CPT codes 78306, 78320, 78802, 78803, 78806, and 78807). In the CY 1995 PFS final rule with comment period (59 FR 63410), we indicated that we would consider applying the policy to other diagnostic tests in the future.

Consistent with recommendations of MedPAC in its March 2005 Report to Congress on Medicare Payment Policy, under the CY 2006 PFS, the MPPR policy was extended to the technical component (TC) of certain diagnostic imaging procedures performed on contiguous areas of the body in a single session (70 FR 70261). The reduction recognizes that, for the second and subsequent imaging procedures, there are some efficiencies in clinical labor, supplies, and equipment time. In particular, certain clinical labor activities and supplies are not duplicated for subsequent procedures and, because equipment time and indirect costs are allocated based on clinical labor time, those would also be reduced accordingly.

The imaging MPPR policy currently applies to computed tomography (CT) and computed tomographic angiography (CTA), magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA), and ultrasound services within 11 families of codes based on imaging modality and body region. When we adopted the policy in CY 2007, we stated that we believed efficiencies were most likely to occur when contiguous body areas are the focus of the imaging because the patient and equipment have already been prepared for the second and subsequent procedures, potentially yielding resource savings in areas such as clerical time, technical preparation, and supplies (70 FR 45850). Therefore, the MPPR policy currently applies only to procedures involving contiguous body areas within a family of codes, not across families, and to those procedures that are provided in a single session. Additionally, while the MPPR policy applies to TC-only services and to the TC of global services, it does not apply to professional component (PC) services.

Under the current imaging MPPR policy, full payment is made for the TC of the highest-paid procedure, and payment is reduced by 25 percent of the TC for each additional procedure when an MPPR scenario applies. We had originally planned to phase in the MPPR policy over a 2-year period, with a 25 percent reduction in CY 2006 and a 50 percent reduction in CY 2007 (70 FR 70263). However, the Deficit Reduction Act of 2005 (Pub. L. 109-171) (DRA) capped the PFS payment amount for most imaging procedures at the amount paid under the hospital Outpatient Prospective Payment System (OPPS). In view of the DRA, we determined that it would be prudent to retain the MPPR at 25 percent while we continued to examine the appropriate payment levels (71 FR 69659). The DRA also exempted reduced expenditures attributable to the MPPR policy from the PFS budget neutrality provision. Most recently, effective July 1, 2010, section 3135(b) of the ACA increased the MPPR on the TC of imaging services under the policy established in the CY 2006 PFS final rule with comment period from 25 to 50 percent and exempted the reduced expenditures attributable to this further change from the PFS budget neutrality provision.

In the July 2009 GAO report entitled, “Medicare Physician Payments: Fees Could Better Reflect Efficiencies Achieved when Services are Provided Together,” the GAO recommended that we take further steps to ensure that fees for services paid under the PFS reflect efficiencies that occur when services are performed by the same physician on the same beneficiary on the same day. The GAO recommended the following: (1) Expanding the existing MPPR policy to the PC to reflect efficiencies in physician work for certain imaging services; and (2) expanding the MPPR to reflect PE efficiencies that occur when certain nonsurgical, nonimaging services are provided together. The GAO also encouraged us to focus on service pairs that have the most impact on Medicare spending.

In the March 2010 report, MedPAC noted its concerns about mispricing of services under the PFS. MedPAC indicated that it would explore whether expanding the unit of payment through packaging or bundling would improve payment accuracy and encourage more efficient use of services.

In the CYs 2009 and 2010 PFS proposed rules (73 FR 38586 and 74 FR 33554, respectively), we stated that we planned to analyze nonsurgical services commonly furnished together (for example, 60 to 75 percent of the time) to assess whether an expansion of the MPPR policy could be warranted. MedPAC encouraged us to consider duplicative physician work, as well as PE, in any expansion of the MPPR policy.

b. Proposed CY 2011 Expansion of the Imaging Technical Component MPPR Policy to Additional Combinations of Imaging Services

Over the past 2 years, the AMA RUC has examined several services billed 90 percent or more of the time together as part of the potentially misvalued service initiative and, in several cases, created one code to describe the complete service, with a value that reflects the expected efficiencies. Notwithstanding the bundling work of the RUC, there may be additional imaging and other diagnostic services that are furnished together less than 90 percent of the time where we could still expect efficiencies in the TC, and in some cases in the PC, resulting in potential overpayment for these services under current policy when furnished together.

Section 1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) specifies that the Secretary shall identify potentially misvalued codes by examining multiple codes that are frequently billed in conjunction with furnishing a single service, and review and make appropriate adjustments to their relative values. As a first step in applying this provision, we are proposing a limited expansion of the current imaging MPPR policy for CY 2011. We will continue to review other possible expansions of the MPPR policy to the TC and/or PC of imaging procedures or other diagnostic tests for the future. Any further changes would be addressed in future rulemaking.

In a related policy for hospital outpatient payment of imaging services, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68559 through 68569), the OPPS adopted a policy to pay for two or more CT and CTA, MRI and MRA, or ultrasound procedures furnished in the same session through a single composite ambulatory payment classification (APC) group. These composite APC payments were based on the 11 families of codes subject to the MPPR under the PFS that were collapsed into 3 imaging families for the OPPS according to their modality—1 for ultrasound, 1 for CT and CTA, and 1 for MRI and MRA services.

At that time, we stated our belief that the contiguous body area concept that was incorporated in the PFS imaging families was not necessary for potential efficiencies to be achieved in an imaging session. We provided examples to illustrate that we would not expect second and subsequent imaging services of the same modality involving noncontiguous body areas to require duplicate facility resources (comparable to the TC under the PFS) for clinical labor activities such as greeting the patient, providing education and obtaining consent, retrieving prior exams, setting up an intravenous infusion, and preparing and cleaning the room, any more than second and subsequent imaging procedures of the same modality involving contiguous body areas. While we noted that multiple imaging claims under the OPPS are generally within the same imaging modality and involve contiguous body areas the vast majority of the time, we estimated that the collapsed 3 families, as opposed to the 11 PFS families, would add 12 percent additional claims to those eligible for a single composite APC payment under the OPPS based on the provision of 2 or more imaging services in a single session, allowing us to capture additional claims with efficiencies.

Taking into consideration the OPPS policy that was adopted in the CY 2009 OPPS/ASC final rule with comment period, in this proposed rule, we are proposing to apply the MPPR regardless of family, that is, the policy would apply to multiple imaging services furnished within the same family of codes or across families. This proposal would simplify the current imaging MPPR policy in a way that is consistent with the standard PFS MPPR policy for surgical procedures that does not group procedures by body region. Therefore, the MPPR would apply to CT and CTA, MRI and MRA, and ultrasound procedures services furnished to the same patient in the same session, regardless of the imaging modality, and not limited to contiguous body areas.

Because of the different pieces of equipment used for CT/CTA, MRI/MRA, and ultrasound procedures, it would be highly unlikely that a single practitioner would furnish more than one imaging procedure involving 2 different modalities to one patient in a single session where the proposed MPPR policy would apply. On the other hand, while most multiple procedures furnished with a single modality in one session would involve procedures currently assigned to one of the 11 imaging families, it would not be uncommon for more than one imaging procedure of the same modality to be furnished across families and, like the scenario for hospital outpatient imaging services, we would expect efficiencies to occur in these cases. Therefore, we believe that an expansion of the current imaging MPPR policy to account for efficiencies in such situations would allow us to pay more appropriately for these multiple imaging procedure sessions, consistent with our ongoing efforts to address misvalued services.

The proposed expansion of the imaging MPPR policy to include all of the current codes in a single family to which the standard 50 percent reduction for second and subsequent procedures would apply would reduce payment for 20 percent more services than the current MPPR policy under the PFS. Thus, under the CY 2011 proposal, we would capture additional efficiencies and pay more appropriately in these cases. We note that, as indicated above, section 3135(b)(2) of the ACA specifies that reduced expenditures attributable to the increase in the imaging MPPR from 25 to 50 percent in CY 2011 are excluded from the PFS budget neutrality adjustment. However, the reduced payment for code combinations that would newly be subject to the imaging MPPR policy under this proposal would be made in a budget neutral manner under the PFS, as these new combinations are not included under section 1848(b)(4)(D) (added by section 3135(b) of the ACA), which addresses “single-session imaging to consecutive body parts” under the established imaging MPPR policy.

Finally, we are also proposing to add the codes displayed in Table 17 to the list of imaging services subject to the MPPR policy in CY 2011. These codes were newly created for CY 2010 and are similar to codes currently in imaging family 2, titled CT and CTA (Chest/Thorax/Abdomen/Pelvis).

We further note that new CY 2010 CPT codes 74261 (Computed tomography (CT) colonography, diagnostic, including image postprocessing; without contrast material) and 74262 (Computed tomography (CT) colonography, diagnostic, including image postprocessing; with contrast material(s) including non-contrast images, if performed) were added to the CY 2010 MPPR policy through the July 2010 PFS quarterly update, with a retroactive effective date of January 1, 2010. These codes replaced CPT code 0067T (Computed tomographic (CT) colonography (i.e., virtual colonoscopy); diagnostic) in CY 2010, which was on the list of procedures subject to the imaging MPPR policy prior to CY 2010.

As discussed earlier in this section, reduced expenditures attributable to the increase in the MPPR for multiple imaging procedures to consecutive body parts (that is, those previously designated in the same family of codes) are exempt from the budget neutrality provision of the PFS. However, the reduced expenditures attributable to the MPPR for combinations of multiple imaging procedures that we are proposing for CY 2011 (the MPPR for multiple imaging procedures not involving consecutive body parts) would be subject to budget neutrality adjustment under the PFS. We note that this formulation for whether reduced expenditures are exempt from budget neutrality applies both to procedures currently subject to the imaging MPPR and to new codes that are subject to the policy in CY 2011 and in future years. To the extent that imaging procedures described by the new codes are furnished in combination with other procedures that are subject to the imaging MPPR on consecutive body areas, the reduced expenditures attributable to the MPPR for these combinations would be exempt from the PFS budget neutrality adjustment.

The complete list of codes subject to the proposed CY 2011 MPPR policy for diagnostic imaging services is included in Addendum F to this proposed rule.

Table 17—Proposed CPT Code Additions to the Diagnostic Imaging MPPR Policy for CY 2011 Back to Top
CPT code Short descriptor
75571 Ct hrt w/o dye w/ca test.
75572 Ct hrt w/3d image.
75573 Ct hrt w/3d image, congen.
75574 Ct angio hrt w/3d image.

c. Proposed CY 2011 Expansion of the MPPR Policy to Therapy Services

In the July 2009 GAO report entitled, “Medicare Physician Payments: Fees Could Better Reflect Efficiencies Achieved when Services are Provided Together,” the GAO found efficiencies when multiple physical therapy services were furnished in one session and concluded that an MPPR policy could be appropriate for these services. In the report, the GAO noted that officials from the AMA RUC explained that time spent on pre-service and post-service therapy activities is spread across the number of services in a typical session in order to avoid duplication of the PE for the services. Nevertheless, the GAO found that there was duplication of certain activities in the intra-service period, and provided the example of time spent testing range of motion or muscle flexibility that was duplicated in commonly observed code pairs.

In the typical clinical scenario for therapy services, we believe that therapy services are misvalued for PFS payment when multiple services are furnished to a patient in a single session because duplicate clinical labor and supplies are included in the PE of the services furnished. We believe this duplication should be accounted for under the PFS, as we currently account for efficiencies in multiple surgical and multiple diagnostic imaging procedures furnished in a single session. Over the past 2 years, the AMA RUC has examined several services billed 90 percent or more of the time together as part of its potentially misvalued service initiative and, in several cases, created one code to describe the complete service, with a value that reflects the expected efficiencies. Notwithstanding the AMA RUC's analyses, in most cases it has not created one code to describe a complete therapy service, in part because many of the core therapy CPT codes are timed codes based on increments of treatment time.

Therefore, we are proposing a further step to implement section 1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) that specifies that the Secretary shall identify potentially misvalued codes by examining multiple codes that are frequently billed in conjunction with furnishing a single service. For CY 2011 we are proposing an MPPR policy for the HCPCS codes listed in Table 18, specifically the separately payable “always therapy” services that are only paid by Medicare when furnished under a therapy plan of care. These services are designated “always therapy” services regardless of who furnishes them and always require therapy modifiers to be reported, specifically -GP (Services rendered under outpatient physical therapy plan of care); -GO (Services rendered under outpatient occupational therapy plan of care); or -GN (Services rendered under outpatient speech pathology plan of care). The therapy codes are available in a file on the CMS Web site at: http://www.cms.gov/TherapyServices/. We have excluded both contractor-priced and bundled codes from Table 18 because, under our proposal, an MPPR would not be applicable for “always therapy” services furnished in combination with these codes. In the case of bundled codes that are not separately paid, there are no explicit efficiencies in the direct PE to be reflected in payment for the second and subsequent therapy services furnished to the patient on the same day. In the case of contractor-priced codes, there is no nationally established pricing that could be uniformly adjusted to reflect the expected efficiencies when multiple therapy services are furnished.

Table 18—Separately Payable “Always Therapy” Services Subject to the Proposed CY 2011 MPPR Policy* Back to Top
CPT/HCPCS code Short descriptor
* Excludes contractor-priced and bundled codes.
92506 Speech/hearing evaluation.
92507 Speech/hearing therapy.
92508 Speech/hearing therapy.
92526 Oral function therapy.
92597 Oral speech device eval.
92607 Ex for speech device rx, 1hr.
92608 Ex for speech device rx addl.
92609 Use of speech device service.
96125 Cognitive test by hc pro.
97001 Pt evaluation.
97002 Pt re-evaluation.
97003 Ot evaluation.
97004 Ot re-evaluation.
97010 Hot or cold packs therapy.
97012 Mechanical traction therapy.
97016 Vasopneumatic device therapy.
97018 Paraffin bath therapy.
97022 Whirlpool therapy.
97024 Diathermy eg, microwave.
97026 Infrared therapy.
97028 Ultraviolet therapy.
97032 Electrical stimulation.
97033 Electric current therapy.
97034 Contrast bath therapy.
97035 Ultrasound therapy.
97036 Hydrotherapy.
97110 Therapeutic exercises.
97112 Neuromuscular reeducation.
97113 Aquatic therapy/exercises.
97116 Gait training therapy.
97124 Massage therapy.
97140 Manual therapy.
97150 Group therapeutic procedures.
97530 Therapeutic activities.
97533 Sensory integration.
97535 Self care mngment training.
97537 Community/work reintegration.
97542 Wheelchair mngment training.
97750 Physical performance test.
97755 Assistive technology assess.
97760 Orthotic mgmt and training.
97761 Prosthetic training.
97762 C/o for orthotic/prosth use.
G0281 Elec stim unattend for press.
G0283 Elec stim other than wound.
G0329 Electromagntic tx for ulcers.

At this time, we are not proposing an MPPR policy for “sometimes therapy” services, specifically those services that may be furnished under a therapy plan of care or otherwise by physicians or NPPs as medical services. We believe that the care patterns are different for the latter group of services that may sometimes be furnished as therapy services, and note that they are less commonly furnished with multiple services in a single session than the “always therapy” services. In the discussion that follows, our reference to therapy services means those HCPCS codes designated annually as “always therapy” services by CMS.

Based on CY 2009 PFS claims data, we identified over 500 therapy service code pairs billed for the same patient in a single session. We then reviewed a sample of the most common therapy code pairs, specifically those high volume code pairs with more than 250,000 combined services per year, to examine the potential for duplication in the PE. These codes pairs represented more than half of the occurrences of therapy services billed together. While we acknowledge that the PE inputs per service for some therapy services were included in the direct PE database based on one-half of the total PE inputs required for two services provided in a single session, which would account for some duplication, this was not the case for all combinations of therapy services. Of the high volume therapy services examined, approximately one-fourth of the code pairs were not valued based on two services. In addition, we note that the CY 2009 PFS claims data show that when multiple therapy services are billed on a claim for the same date of service, the median number is four services per day. Therefore, even for those clinical labor times that may reflect the allocation of total time across two units of therapy services, we believe that some elements of the current PE inputs are duplicated based on current patterns of therapy service delivery where most multiple service claims involve delivery of more than 2 services in a session.

Duplicate labor activities currently included in the PE for the service period for these high volume pairs of therapy services are as follows: clean room/equipment; education/instruction/counseling/coordinating home care; greet patient/provide gowning; obtain measurements, for example, ROM/strength/edema; and post-treatment patient assistance. The most common duplicate supply item included in the PE was the multispecialty visit pack. Examples of duplicated and unduplicated labor activities and supplies for two sample therapy code pairs and our estimates of potential clinically appropriate time and quantity reductions for multiple service sessions are displayed in Table 19. We note that CY 2009 PFS claims data for these sample code pairs include over 3.4 million pairs of CPT codes 97112 (Therapeutic procedure, 1 or more areas, each 15 minutes; neuromuscular reeducation of movement, balance, coordination, kinesthetic sense, posture, and/or proprioception for sitting and/or standing activities) and 97110 (Therapeutic procedure, 1 or more areas, each 15 minutes; therapeutic exercises to develop strength and endurance, range of motion and flexibility) furnished by the same practitioner on the same day and over 500,000 pairs of CPT codes 97001 (Physical therapy evaluation) and 97140 (Manual therapy techniques (e.g., mobilization/manipulation, manual lymphatic drainage, manual traction), 1 or more regions, each 15 minutes).

Table 19: Examples of Duplicate PE Inputs for Therapy Services That Should Be Accounted for When Multiple Services Are Furnished in One Session Back to Top

Example 1: CPT code 97112 (Therapeutic procedure, 1 or more areas, each 15 minutes; neuromuscular reeducation of movement, balance, coordination, kinesthetic sense, posture, and/or proprioception for sitting and/or standing activities) and CPT code 97110 (Therapeutic procedure, 1 or more areas, each 15 minutes; therapeutic exercises to develop strength and endurance, range of motion and flexibility)

Staff description Labor task description Time period Code A 97112 labor task time Code B 97110 labor task time Total minute reduction
Physical Therapy Aide Clean room/equipment Service Period, Post-Service 1 1 1
Physical Therapy Assistant Education/instruction/counseling/coord home care Service Period, Post-Service 2.5 2.5 2.5
Physical Therapy Aide Greet patient/provide gowning Service Period, Pre-Service 1.5 1.5 1.5
Physical Therapy Assistant Obtain measurements, e.g., ROM/strength/edema Service Period, Pre-Service 1.5 1.5 1.5
Physical Therapy Assistant Obtain vital signs Service Period, Pre-Service 1 1 1
Physical Therapy Assistant Phone calls between visits with patient, family Post-Service Period 1 1 1
Physical Therapy Aide Post treatment patient assistance Service Period, Post-Service 1 1 1
Physical Therapy Assistant Review/read documentation, plan of care, treatment goals Pre-Service Period 1.5 1.5 1.5
Physical Therapy Aide Verify/Coordinate availability of resources/equip Pre-Service Period 1.5 1.5 1.5
Supply description Price Code A 97112 quantity Code B 97110 quantity Code B 97110 quantity reduction
pack, minimum multi-specialty visit $1.14 0.5 0.5 0
Thera-bands (6in width) 0.06 1.5 1.5 1.5

Example 2: CPT code 97001 (Physical therapy evaluation) and CPT Code 97140 (Manual therapy techniques (eg, mobilization/manipulation, manual lymphatic drainage, manual traction), 1 or more regions, each 15 minutes)

Staff description Labor task description Time period Code A 97001 labor task time Code B 97140 labor task time Total minute reduction
Physical Therapy Aide Clean room/equipment Service Period, Post-Service 3 1 1
Physical Therapy Assistant Education/instruction/counseling/coord home care Service Period, Post-Service 2 1 1
Physical Therapy Aide Greet patient/provide gowning Service Period, Pre-Service 3 1.5 1.5
Physical Therapy Assistant Obtain measurements, e.g., ROM/strength/edema Service Period, Pre-Service 8 1.5 1.5
Physical Therapy Assistant Obtain vital signs Service Period, Pre-Service 3 1 1
Physical Therapy Assistant Phone calls between visits with patient, family Post-Service Period 2 1 1
Physical Therapy Assistant Review/read documentation, plan of care, treatment goals Pre-Service Period 1 .5 .5
Physical Therapy Aide Verify/Coordinate availability of resources/equip Pre-Service Period 3 1.5 1.5
Physical Therapy Aide Prep and position patient Service Period, Pre-Service 2 0 0
Physical Therapy Aide Prepare room, equipment, supplies Service Period, Pre-Service 2 0 0
Physical Therapy Aide Post treatment assistance Service Period, Post-Service 0 1 0
Supply description Price Code A 97001 quantity Code B 97140 quantity Code B 97140 quantity reduction
pack, minimum multi-specialty visit $1.14 1 0.5 0.5
lotion, message, unscented 0.158 0 0.5 0

We did not remove minutes for clinical labor tasks that were not duplicated. For example, for CPT code pair 97001 and 97140 the following tasks were not duplicated: Post treatment patient assistance; prep and position patient; and prepare room, equipment, and supplies. In addition, we did not remove any supply items that would be required for only one of the separate services because these would not be duplicated in the PE applicable to the combination of services. We estimated no reduction for equipment time, even though efficiencies would be expected for equipment that is used in both services when they are furnished together. Finally, a corresponding reduction to the indirect expenses is appropriate since indirect costs are allocated partially based on direct costs. For five high volume therapy code pairs that each occur over 2 million time in PFS claims for multiple therapy services and account for almost half of such claims, we estimated that the resulting reduction in the PE for the lower paying code would range from 28 to 56 percent.

In summary, given the duplicative clinical labor activities and supplies as shown in the code combination examples, we believe it would be appropriate to extend the 50 percent MPPR policy that is currently applied to surgical services and the TC of imaging services, to the PE component of certain therapy services. Specifically, we are proposing to apply a 50 percent payment reduction to the PE component of the second and subsequent therapy services for multiple “always therapy” services furnished to a single patient in a single day. Because it would be difficult to determine the precise beginning and end of therapy sessions and we do not believe that beneficiaries would typically have more than one therapy session in a single day, we are proposing to apply the 50 percent MPPR policy to the PE component of subsequent therapy services provided to the same patient on the same day, rather than in the same session.

We note that many therapy services are time-based CPT codes, so multiple units of a single code may be billed for a single session that lasts for a longer period of time than one unit of the code. The proposed MPPR policy would apply to multiple units of the same therapy service, as well as to multiple different services, when furnished to the same patient on the same day. Full payment would be made for the service or unit with the highest PE and payment would be made at 50 percent of the PE component for the second and subsequent procedures or units of the service. The work and malpractice components of the therapy service payment would not be reduced. For therapy services furnished by a group practice or “incident to” a physician's service, the MPPR would apply to all “always therapy” services furnished to a patient on the same day, regardless of whether the services are provided in one therapy discipline or multiple disciplines, for example, physical therapy, occupational therapy, or speech-language pathology. The proposed CY 2011 MPPR policy would apply to both those services paid under the PFS that are furnished in the office setting and those services paid at the PFS rates that are furnished by outpatient hospitals, home health agencies, comprehensive outpatient rehabilitation facilities (CORFs), and other entities that are paid by Medicare for outpatient therapy services. Table 20 provides a sample calculation of the current and proposed CY 2011 payment for multiple therapy services furnished on the same day. For those services paid under the PFS, the PFS budget neutrality provision would apply so that the estimated reduced expenditures for therapy services would be redistributed to increase payment for other PFS services.

Table 20—Sample Proposed Payment Calculation for Multiple Therapy Services Furnished to a Single Patient on the Same Day Back to Top
Procedure 1 Unit 1 Procedure 1 Unit 2 Procedure 2 Current total payment Proposed CY 2011 total payment Proposed payment calculation
Work $7.00 $7.00 $11.00 $25.00 $25.00 no reduction.
PE 10.00 10.00 8.00 28.00 19.00 $10 + (0.5 × $10) + (0.5 × $8).
Malpractice 1.00 1.00 1.00 3.00 3.00 no reduction.
Total 18.00 18.00 20.00 56.00 47.00 $18 + $7 + (0.5 × $10) + $1 + $11 + (0.5 × $8) + $1.

We believe this proposed therapy MPPR policy would provide more appropriate payment for therapy services that are commonly furnished together by taking into account the duplicative clinical labor activities and supplies in the PE that are not furnished more than once in the single therapy session. This approach is consistent with the statutory requirement for the Secretary to identify, review, and adjust the relative values of potentially misvalued services under the PFS as specified by section 3134 of the ACA. We also believe this proposed policy is responsive to Congressional concerns about significant growth in therapy spending and to MedPAC and GAO recommendations regarding the expansion of MPPR policies under the PFS to account for additional efficiencies. We note that paying more appropriately for therapy services based on PE relative values that are adjusted for the clinical scenario under which the services are furnished would result in reduced therapy expenditures, and beneficiaries would be able to receive more medically necessary outpatient therapy services before reaching the therapy cap. For a further discussion of potential alternatives to the therapy caps, we refer readers to section III.A.2. of this proposed rule.

5. High Cost Supplies

a. Background

MedPAC and the AMA RUC have long recommended that CMS establish a frequent price update process for high-cost supplies that are direct PE inputs in the PE database for services paid under the PFS because of their speculation that prices for these items may decrease over time as competition increases and new technologies disseminate into medical practice. MedPAC in particular has perennially noted that it is important for CMS to update the prices of high-priced supplies on a regular basis as inaccurate prices can distort PE RVUs over time, contributing to the misvaluing of established services under the PFS.

Most of the current prices for high-cost supplies included in the direct PE database are from 2004 or earlier. There are currently 62 unique supplies with prices of $150 or more in the proposed CY 2011 PE database, which is available on the CMS Web site under the supporting data files for the CY 2011 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. Finally, we note that we do not actually pay the supply prices included in the PE database but, instead, use them to develop the PE RVUs according to our standard PE methodology as described in section II.A.2. of this proposed rule. Payment for a procedure that uses a supply is based upon the PE RVUs that result from the PE methodology, and supplies are among the direct PE inputs for procedures. Therefore, it is the relativity of high-cost supply prices to prices for other PE items (equipment, low-cost supplies, and clinical labor) that is important.

Accordingly, in the CY 2009 PFS proposed rule (73 FR 38582), we proposed a process to update the prices for high-cost supplies priced at $150 or more that are included in the PE inputs for procedures paid under the PFS PE methodology. The CY 2009 proposed rule described a publicly transparent process in which CMS would publish a list of the high-cost supplies in the PFS proposed rule (65 supplies were included in the CY 2009 PFS proposed rule), and specialty societies or other relevant organizations would provide acceptable documentation supporting the pricing for the supplies during the 60-day public comment period. Furthermore, in that same proposed rule (73 FR 38582), we provided guidance on what constitutes valid, reliable documentation that reflects the typical price of the high-cost item in the marketplace. We outlined examples of acceptable documentation, such as a detailed description (including system components), sources, and current pricing information, confirmed by copies of catalog pages, invoices, and quotes from manufacturers, vendors, or distributors. We indicated that documentation that does not include specific pricing information such as phone numbers and addresses of manufacturers, vendors, or distributors or Web site links without pricing information would not be acceptable. We also noted that if acceptable documentation was not received within the proposed rule's 60-day public comment period, we would use prices from the Internet, retail vendors, and supply catalogs to determine the appropriate cost, and that we would use the lowest price identified by these sources (73 FR 38582). Finally, we solicited public comments on alternatives that could be used to update pricing information in the absence of acceptable documentation provided by specialty societies or other interested organizations.

In the CY 2009 PFS final rule with comment period (73 FR 69882), we indicated that we received many comments on the proposed process and, while some commenters expressed support, others believed the proposed process was flawed and burdensome. Moreover, although we received some data in response to our request for information on the 65 high-cost supplies with prices of $150 or more, much of what we received was not complete or did not represent typical market prices. In particular, we expressed concern that the submitted data often represented manufacturer list prices for the premier models of many supplies, while we believed there were less expensive alternatives. Therefore, we were unable to determine the most appropriate, typical supply prices for our PFS payment methodology that prices the typical service described by a HCPCS code. Rather than finalizing the proposed process for updating high-cost supplies and revising the prices for the 65 supplies based on inadequate pricing information, we stated in the CY 2009 PFS final rule with comment period (73 FR 69882) that we would research the possibility of using an independent contractor to assist us in obtaining accurate pricing information. Furthermore, we informed the public that we planned to study the limitations of available pricing data and determine how to revise our proposed process to elicit better data.

In the CY 2010 PFS proposed rule and final rule with comment period (74 FR 33554 and 61776, respectively), we stated that we were continuing to examine ways to obtain accurate pricing information for high-cost supplies. We noted again in the CY 2010 PFS proposed rule that we would depend upon the cooperation of the medical community to obtain typical prices in the marketplace, and we provided stakeholders with another opportunity to submit public comments on the process. In the CY 2010 PFS final rule with comment period, we acknowledged commenters' general support for an initiative to ensure accurate pricing of high-cost supplies. In general, the commenters strongly preferred a transparent and public process, and we stated that we would consider this perspective as we explore the best way to ensure that accurate supply pricing information is used in the PFS payment methodology.

b. Future Updates to the Prices of High-Cost Supplies

In working towards refining a process to update the prices of high-cost supplies and consistent with our intention expressed in the CY 2009 PFS final rule with comment period (73 FR 69882), we contracted with an independent contractor during CY 2009 to help us study the availability of accurate pricing information. We requested that the independent contractor, L Policy Research, research pricing information for the 65 high-cost supplies listed in the CY 2009 proposed rule (73 FR 38583 through 38585) and determine what, if any, pricing information reflecting typical market prices could be obtained for these high-cost supplies.

We first requested that the contractor explore publicly available sources to obtain typical market prices for these supplies. The contractor utilized supply vendor catalogs and Web sites and directly contacted vendors, manufacturers, group purchasing organizations (GPOs), and any other suppliers that the contractor identified in their research in order to identify prices for each of the supplies. Where more than one version of a supply item appeared to match a description of a high-cost supply and/or more than one possible vendor or manufacturer was identified, the contractor attempted to obtain prices from the multiple sources.

Upon review of the high-cost supply list, the contractor refined the list to 62 unique high-cost items with prices of $150 or more for the study. The original list only consisted of 64 items but included one item inadvertently listed twice (CMS Supply Code SD207 (suture device for vessel closure (Perclose A-T)) and one item (CMS Supply Code SH079 (collagen implant)) that was deleted from the PE database after CY 2007 because it was no longer used as an input for any codes. While the contractor was able to obtain prices for 37 of the 62 unique supplies, the contractor was unable to obtain pricing information for the remaining 25 supplies. Documentation of these prices, a requirement we discussed in the CY 2009 PFS proposed rule (73 FR 38582), was only obtained for 25 of the 36 supplies with new pricing information. For the remainder, while the contractor was given price quotes over the phone, the sales agents or customer service representatives declined to provide any form of written documentation, in some cases because company policies restricted providing pricing documentation to prospective customers without an account. Moreover, information on typical discounts was obtained for only seven products, and only one discount was documented. In the case of these products, companies disclosed the maximum available discounts, ranging from 18 percent to 45 percent. Relative to prices currently included in the PE database, the contractor found higher prices for the majority of the medical supplies that were researched, specifically 23 supplies with higher prices, 8 with lower prices, and 3 with the same price. The high-cost supplies studied by the contractor and their current database prices are displayed in Table 20.

Table 20—High-Cost Supplies With Prices of $150 or Greater in the PFS Direct PE Database That Were Studied by the CMS Contractor Back to Top
CMS supply code Supply description Current database unit price Associated CPT codes
1Six pack.
2Set of 4.
310 pack.
stent, ureteral, wguidewire, 3cm flexible tip $235 52332
probe, cryoablation, renal 1,175 50593
catheter, intradiscal (spineCATH) 1,380 22526, 22527
probe, cryoablation (Visica ICE 30 or 40) 1,589 19105
kit, capsule, ESO, endoscopy w-application supplies (ESO) 450 91111
catheter, balloon, lacrimal 306 68816
catheter, CVA, system, tunneled w-port, dual (LifeSite) 1,750 36566
stent, vascular, deployment system, Cordis SMART 1,645 37205, 37206
agent, embolic, 2 ml uou 258 37210
tube, jejunostomy 195 49441, 49446, 49451, 49452
SA005 kit, capsule endoscopy w-application supplies (M2A) 450 91110
SA010 kit, CVA catheter, tunneled, without portpump 308 36557, 36558, 36581
SA011 kit, CVA catheter, tunneled, with subcut port 495 36560, 36561, 36563, 36582, 36583
SA015 kit, for percutaneous thrombolytic device (Trerotola) 488 36870, 37184, 37186, 37187, 37188
SA020 kit, loop snare (Microvena) 275 36595, 37203
SA022 kit, percutaneous neuro test stimulation 305 63610, 64561
SA024 kit, photopheresis procedure 858 36522
SA025 kit, PICC with subcut port 586 36570, 36571, 36585
SA036 kit, transurethral microwave thermotherapy 1,149 53850
SA037 kit, transurethral needle ablation (TUNA) 1,050 53852
SA038 kit, transurethral waterinduced thermotherapy 650 53853
SA039 kit, vertebroplasty (LP2, CDO) 696 22520, 22521
SA074 kit, endovascular laser treatment 519 36478
SA075 kit, hysteroscopic tubal implant for sterilization 1,245 58565
SA077 kit, pleural catheter insertion 329 32550, 96440
SA087 tray, RTS applicator (Mammosite) 2,550 19296
SA091 tray, scoop, fast track system 750 31730
SA092 kit, gene, MLL fusion 1,395 88385
SA093 kit, priming, random 1463 88385, 88386
SC085 tubing set, plasma exchange 173 36514
SD018 catheter, balloon, thermal ablation (Thermachoice) 727 58353
SD019 catheter, balloon, ureteral-GI (strictures) 166 43456, 45303, 45340, 45386, 46604
SD020 catheter, CVA, tunneled, dual (Tesio) 355 36565
SD023 catheter, enteroclysis 183 74251, 74260, 89100, 89105, 89130, 89132, 89135, 89136, 89140, 89141
SD058 electrode, grid 475 95829
SD072 eyelid weight implant, gold 218 67912
SD073 fiducial screws (set of 4) 2558 77011, 77301
SD094 mammotome probe 200 19103
SD109 probe, radiofrequency, 3 array (StarBurstSDE) 1,995 20982, 32998, 41530, 50592
SD151 catheter, balloon, low profile PTA 432 35470, 35471, 35474
SD152 catheter, balloon, PTA 244 35472, 35473, 35475, 35476, G0392, G0393
SD154 catheter, microcatheter (selective 3rd order) 338 36217, 36247, 36481, 37183, 37210
SD155 catheter, RF endovenous occlusion $725 36475
SD175 guidewire, steerable (Transcend) 180 36217, 36247, 36481, 37183, 37205, 37206, 37210, 49440, 49441, 49442, 49446, 49450, 49451, 49452, 49460
SD177 hysteroscope, ablation device 1,146 58563
SD185 plasma antibody adsorption column (Prosorba) 1,150 36515
SD186 Plasma LDL adsorption column (Liposorber) 1,380 36516
SD189 plate, surgical, mini-compression, 4 hole 226 21208
SD191 plate, surgical, reconstruction, left, 5 × 16 hole 719 21125, 21127, 21215
SD193 plate, surgical, rigid comminuted fracture 389 21461, 21462
SD204 sensor, pH capsule (Bravo) 225 91035
SD205 sheath, endoscope ultrasound balloon 154 31620
SD207 suture device for vessel closure (Perclose A-T) 225 35470, 35471, 35472, 35473, 35474, 35475, 37184, 37187, 37188, 37205, G0392
SD215 probe, endometrial cryoablation (Her Option) 1,250 58356
SD216 catheter, balloon, esophageal or rectal (graded distention test) 165 91040, 91120
SD218 stent, ureteral, without guidewire 162 50382, 50384, 50385
SF028 laser tip (single use) 290 30117, 52214, 52224, 52317
SF029 laser tip, bare (single use) 150 46917, 46924
SF030 laser tip, diffuser fiber 850 52647, 52648
SL055 DNA stain kit (per test) 3150 88358
SL209 array kit, Genosensor 2,121 88386
SL225 gas, nitogen, ultra-high purity (compressed) grade 5.0 190 88385, 88386

Next, we directed the contractor to access the United States General Services Administration (GSA) medical supply schedule to augment the results obtained through review of vendor materials and direct contact with vendors, manufacturers, and GPOs. We note that the GSA establishes long-term government-wide contracts with commercial firms for many products, negotiating contracts and determining prices to be fair and reasonable prior to placing them on schedule. Included on the schedule are thousands of medical supplies at prices that, in most cases, are established through competition. The GSA schedule is an open solicitation and a business of any size, if it is stable and financially sound, can request to be included on the schedule. GSA's vendors usually are nationwide vendors with substantial non-government sales, and products on the schedule must be manufactured in the U.S. or in a nation with a trade agreement with the United States. Submissions for the schedule are received 365 days per year, vendor contracts can be of varying lengths, and vendors can add or delete products from the schedule. Depending on the aggregate cost estimate associated with the vendor's supply items, the time to achieve inclusion on the schedule can vary from as short as several months to as long as 2 years. The GSA has delegated authority to the Department of Veterans Affairs (VA) to procure medical supplies under the VA Federal Supply Schedules Program.

Using the GSA general search engine under the category “Laboratory, Scientific, & Medical” available at https://www.gsaadvantage.gov/advgsa/advantage/main/start_page.do the contractor obtained nine prices for items similar to the high-cost supplies in the PE database and that are displayed in Table 20 from the publicly available information on the Internet, including pricing for one product for which its prior work did not yield an updated price. We believe that additional items that are similar to the high-cost supplies in the PE database and that may be used with the same procedures may be on the GSA schedule but we are still working through the crosswalk between our supplies and the way the supplies are presented on the GSA schedule. Examples of high-cost supplies in the PE database that the contractor located on the GSA schedule include: (1) Kit, capsule, ESO, endoscopy w-application supplies (ESO), priced at $450 in the PE database and $444 on the GSA schedule; and (2) tube, jejunostomy, priced at $195 in the PE database and $60 to $83 on the GSA schedule, depending on the characteristics of the tube.

Since the GSA medical supply schedule is a source for pricing information that is public and transparent and reflects the best government contract price for a product, we believe it is a desirable resource for us to use in a refined process for updating the prices of high-cost supplies. For historical context, CMS has previously proposed to use VA prices that result from the competitive marketplace as comparison points to limit the Medicare prices for oxygen and certain items of durable medical equipment and prosthetic devices (62 FR 38100 through 38107, and 64 FR 44227 through 44231) in 1997 and 1999, respectively. These prior proposals were based on our determination that the Medicare payment amounts for these items as durable medical equipment or prosthetics (not as physicians' services) were not inherently reasonable. We note, however, that our current interest in the GSA schedule for pricing high-cost supplies for payment of physicians' services is not based on considerations of inherent reasonableness, and we do not actually pay the prices in the PE database for supplies under the PFS.

We further note that public commenters on pricing high-cost supplies have consistently requested that CMS ensure that the pricing information used to update the prices is provided publicly. The commenters have observed that this transparency would enable stakeholders to evaluate and provide feedback to the agency on pricing accuracy (74 FR 61776). We also acknowledge that our past attempts over several years to identify typical market prices for the high-cost supplies have been inhibited by the limited availability of public data that meet the documentation requirements we have previously established. Individual vendors do not always publish their product prices or provide typical discounts. Moreover, discounts may vary depending on suppliers and the volume of supplies purchased. Our understanding of the GSA medical supply schedule is that the publicly listed fair and reasonable prices on the schedule generally do not include volume and or certain other discounts that may be subsequently negotiated by the buyer. Consequently, we would consider the prices available on the GSA schedule to represent the “individual item ceiling” price for a single item purchase, which we believe would be appropriate to estimate the high-cost supply prices for physicians' office purchases. We are soliciting public comments regarding the high-cost supplies in the direct PE database for the CY 2011 PFS proposed rule, available on the CMS Web site as noted earlier in this section, and the corresponding supplies or alternative items that could be used for the same function that are currently on the GSA supply schedule. We encourage commenters to provide a detailed analysis of the current relationships between the items in the PE database and those on the GSA schedule.

At this time, we would like to describe a refined process for regularly updating prices for high-cost supplies under the PFS and solicit comments on how we could improve on this process. The process could occur every 2 years beginning as soon as CY 2013, although we note that we would propose the refined process through rulemaking before revising the prices for any high-cost supply item based on the GSA schedule. We could also consider establishing a different price update period depending on whether a high-cost supply was a new supply in the PE database or had been in use for some time, in which case we might expect that the price would have stabilized and, therefore, could be updated less frequently. In general, we would expect that the periodicity of updating prices for high-cost supplies that we eventually adopted would balance the associated administrative burden with the rate of price changes, to ensure that the associated procedures remain appropriately valued, rather than increasingly misvalued, over time.

We envision that we would base high-cost supply price inputs on the publicly available price listed on the GSA medical supply schedule. Since the medical community would have several years to examine the GSA medical supply schedule before the refined process would be adopted, and we have found no apparent limitations on vendors placing products on the GSA schedule, beyond the schedule's interest in competitive, best value procurements, stakeholders would have the opportunity to ensure that any high-cost direct PE input for a PFS service that may currently be missing from the GSA medical supply schedule would be included before CMS needs to access the publicly available price for the item. If a supply price were not publicly available on the GSA medical supply schedule by the time CMS needs to access the price, we would propose to reduce the current price input for the supply by a percentage that would be based on the relationship between GSA prices at that time and the existing PE database prices for similar supplies (currently an average 23 percent reduction). We believe that this refined process is desirable because it is consistent with commenters' repeated requests for the updating methodology to be transparent and predictable.

Moreover, the VA (with responsibility delegated by the GSA) determines whether prices are fair and reasonable by comparing the prices and discounts that a company offers the government with the prices and discounts that the company offers to commercial customers. Therefore, using the GSA medical supply schedule as a source for publicly available prices would also better account for product-specific market dynamics than the alternative of an across-the-board percentage reduction for supplies not on the GSA schedule based on general price trends for the high-cost supplies on the schedule. That is, if the market price of a particular supply were not to drop according to broad trends for other high-cost supplies, suppliers would have the opportunity to provide their price to the public on the GSA schedule in order to preclude any reduction in Medicare payment for procedures associated with that supply.

Finally, we would like to reiterate that we are interested in receiving detailed public comments on the refined process discussed above, including all aspects of the price update methodology that we have presented. Moreover, we believe a similar approach could potentially be appropriate to update the prices for other supplies in the PE database that would not fall under our definition of high-cost supplies, and we welcome further public comments on that possible extension. We also invite further suggestions for alternative approaches to updating high-cost supply prices, specifically those that would result in a predictable, public, and transparent methodology that would ensure that the prices in the PE database reflect typical market prices. These principles are particularly important in order to ensure that the services that utilize the high-cost supplies when provided in the physician's office are appropriately valued under the PFS and continue to be appropriately valued over time.

D. Geographic Practice Cost Indices (GPCIs)

1. Background

Section 1848(e)(1)(A) of the Act requires us to develop separate Geographic Practice Cost Indices (GPCIs) to measure resource cost differences among localities compared to the national average for each of the three fee schedule components (that is, work, PE, and malpractice). While requiring that the PE and malpractice GPCIs reflect the full relative cost differences, section 1848(e)(1)(A)(iii) of the Act requires that the physician work GPCIs reflect only one-quarter of the relative cost differences compared to the national average. In addition, section 1848(e)(1)(G) of the Act sets a permanent 1.5 work GPCI floor in Alaska for services furnished beginning January 1, 2009. Section 1848(e)(1)(C) of the Act requires us to review and, if necessary, adjust the GPCIs at least every 3 years. This section also specifies that if more than 1 year has elapsed since the last GPCI revision, we must phase in the adjustment over 2 years, applying only one-half of any adjustment in each year. As discussed in the CY 2009 PFS final rule with comment period (73 FR 69740), the CY 2009 adjustment to the GPCIs reflected the fully implemented fifth comprehensive GPCI update. CY 2010 would have typically included no adjustments to the GPCIs. However, section 3102(a) of the ACA amends section 1848(e)(1)(E) of the Act to extend the 1.0 work GPCI floor for services furnished through December 31, 2010. Additionally, section 3102(b) of the ACA adds a new subparagraph 1848(e)(1)(H) to the Act, which specifies that for CY 2010 and CY 2011, the employee compensation and rent portions of the PE GPCI must reflect only one-half of the relative cost differences for each locality compared to the national average. The new subparagraph also includes a “hold harmless” provision for CY 2010 and CY 2011 for any PFS locality that would otherwise receive a reduction to its PE GPCI resulting from the limited recognition of cost differences. Additionally, section 1848(e)(1)(I) of the Act (as added by section 10324(c) of ACA) establishes a 1.0 PE GPCI floor for services furnished in frontier States effective January 1, 2011. In May 2010, we provided our Medicare contractors with an updated CY 2010 payment file that included the 1.0 work GPCI floor and the PE GPCIs calculated according to the methodology required by section 1848(e)(1)(H) of the Act (as added by section 3102(b) of ACA) for CY 2010, to be used for payment of services furnished on or after January 1, 2010.

For the CY 2011 PFS proposed rule, we have completed the sixth review of the GPCIs and are proposing new GPCIs. We note that section 1848(e)(1)(E) of the Act (as amended by section 3102(a) of ACA) extends the 1.0 work GPCI floor only through December 31, 2010. Under current statute, the 1.0 work GPCI floor will expire on January 1, 2011. Therefore, the CY 2011 physician work GPCIs and summarized geographic adjustment factors (GAFs) do not reflect the 1.0 work floor. However, section 1848(e)(1)(G) of the Act (as amended by section 134(b) of the MIPPA) set a permanent 1.5 work GPCI floor in Alaska for services furnished beginning January 1, 2009; and, as noted above, section 1848(e)(1)(I) of the Act (as added by section 10324(c) of ACA) provides for a permanent 1.0 PE GPCI floor for frontier States effective January 1, 2011. Therefore, as required by the statute, the 1.5 work GPCI floor for Alaska and the 1.0 PE GPCI floor for frontier States will be in effect for CY 2011. In addition to the limited recognition of certain cost differences for the PE GPCIs, section 1848(e)(1)(H) of the Act (as added by section 3102(b) of ACA) also requires us to complete an analysis of the data sources used and cost share weights assigned to the PE GPCIs. Implementation of ACA provisions related to the CY 2011 PE GPCIs is discussed in more detail in the GPCI update section below.

See Addenda D and E to this proposed rule for the proposed CY 2011 GPCIs and summarized GAFs.

2. GPCI Update

The proposed updated GPCI values were developed by Acumen, LLC (Acumen) under contract to CMS. As mentioned above, there are three GPCI components (physician work, PE, and malpractice), and all GPCIs are developed through comparison to a national average for each component. Additionally, each of the three GPCIs relies on its own data source(s) and methodology for calculating its value as described below.

a. Physician Work GPCIs

The physician work GPCIs are designed to capture the relative cost of physician labor by Medicare PFS locality. Previously, the physician work GPCIs were developed using the median hourly earnings from the 2000 Census of workers in seven professional specialty occupation categories which we used as a proxy for physicians' wages and calculated to reflect one-quarter of the relative cost differences for each locality compared to the national average. Physicians' wages are not included in the occupation categories because Medicare payments are a key determinant of physicians' earnings. Including physicians' wages in the physician work GPCIs would, in effect, have made the indices dependent upon Medicare payments.

The physician work GPCIs were updated in CYs 2001, 2003, 2005, and 2008 using professional earnings data from the 2000 Census. However, wage and earnings data are no longer available from the Census long form and the 2000 data are outdated. Therefore, for the proposed sixth GPCI update, we used the 2006 through 2008 Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) data as a replacement for the 2000 Census data. The use of BLS OES data as a replacement for the 2000 Census data is discussed in more detail in the update of the PE GPCIs section. As noted above, the 1.0 work GPCI floor is set to expire under current statute on December 31, 2010. Therefore, the CY 2011 proposed physician work GPCIs reflect the removal of this floor.

b. Practice Expense GPCIs

(1) The Affordable Care Act Requirements for PE GPCIs

General Methodology for the CY 2011 GPCIs

ACA added a new subparagraph 1848(e)(1)(H) to the Act which revises the methodology for calculating the PE GPCIs for CY 2010 and CY 2011 so that the employee compensation and rent portions of the PE GPCIs reflect only one-half of the relative cost differences for each locality compared to the national average. Additionally, under section 1848(e)(1)(H)(iii) of the Act (as added by section 3102(b) of the ACA), each PFS locality is held harmless so that the PE GPCI will not be reduced as a result of the change in methodology for PE GPCIs. In accordance with section 1848(e)(1)(H)(ii) of the Act (as added by section 3102(b) of ACA), the employee compensation and rent components of the proposed CY 2011 PE GPCIs were calculated to reflect one-half of the cost differences for each PFS locality relative to the national average cost. Additionally, as required by the statute, physicians' services furnished in each PFS locality would be adjusted by the higher of the locality's PE GPCI calculated with the limited recognition of employee compensation and rent cost differences or the PE GPCI calculated without the limited recognition of cost differences.

Phase-In of PE GPCIs

Section 1848(e)(1)(C) of the Act requires us to phase in GPCI adjustments over 2 years if there was more than 1 year between GPCI adjustments. In accordance with the statute, we are proposing to phase in the updated PE GPCIs using one-half of the CY 2010 values and one-half of the fully implemented values (as described in this section). To apply the phase-in and hold harmless provisions of the Act, we calculated transitional PE GPCIs based on two scenarios. Under the first scenario, we calculated transitional CY 2011 PE GPCIs using the full recognition of employee compensation and rent cost differences for each locality as compared to the national average. The CY 2011 transitional PE GPCI values with full recognition of cost differences were calculated using one-half of the CY 2010 PE GPCI values with full recognition of cost differences and one-half of the updated PE GPCIs with full recognition of cost differences. The first scenario represents the transitional PE GPCI values prior to the limited recognition of cost differences. In other words, this scenario does not include the effects of sections 1848(e)(1)(H)(i) and (ii) of the Act (as added by section 3102(b) of ACA).

For the second scenario, we calculated transitional CY 2011 PE GPCIs with the limited recognition of cost differences for the employee compensation and rent components (as required by sections 1848(e)(1)(H)(i) and (ii) of the Act (as added by section 3102(b) of ACA)). The CY 2011 transitional PE GPCI values with the limited recognition of cost differences were calculated using one-half of the CY 2010 PE GPCIs with the limited cost differences and one-half of the updated PE GPCIs with the limited cost differences. The hold harmless provision under section 1848(e)(1)(H)(iii) of the Act (as added by section 3102(b) of ACA) was applied by selecting the greater of the CY 2011 transitional PE GPCI value calculated with the limited recognition of cost differences or the CY 2011 transitional PE GCPI value calculated with full recognition of cost differences. The phase-in of the CY 2011 PE GPCIs and application of the hold harmless provision are illustrated in Table 21 below.

Table 21—Phase-In of the CY 2011 PE GPCIs Back to Top
CY 2010 Updated GPCIs CY 2011 (transitional year) Hold harmless
*ACA in this table means the Affordable Care Act.
File 1        
PE GPCI Without 3102(b) of ACA Without ACA Without ACA (Updated Data) (1/2of 2010) + (1/2Updated GPCI) Greater of File 1 Transitional Value
File 2        
PE GPCI With 3102(b) of ACA With ACA With ACA (Updated Data) (1/2of 2010 w/ACA) + (1/2Updated GPCI w/ACA) or File 2 Transitional Value.

Data Analysis

Section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of ACA) also requires the Secretary to “analyze current methods of establishing practice expense adjustments under subparagraph (A)(i) and evaluate data that fairly and reliably establishes distinctions in the cost of operating a medical practice in different fee schedule areas.” This section also requires the Secretary to make appropriate adjustments to the PE GPCIs no later than by January 1, 2012. To implement this statutory requirement, we are proposing to implement changes in PE data sources and cost share weights discussed herein effective beginning in CY 2011.

In accordance with section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of ACA), we have analyzed the current methods and data sources used in the establishment of the PE GPCIs. With respect to the method used, we began with a review of the GAO's March 2005 Report entitled, “MEDICARE PHYSICIAN FEES: Geographic Adjustment Indices Are Valid in Design, but Data and Methods Need Refinement” (GAO-05-119). While we have raised concerns in the past about some of the GAO's GPCI recommendations, we note that with respect to the PE GPCIs, the GAO did not indicate any significant issues with the methods underlying the PE GPCIs. Rather, the report focused on some of the data sources used in the method. For example, the GAO stated that the wage data used for the PE GPCIs are not current. Similarly, upon our reexamination of public comments we have received on the PE GPCIs for previous updates, we note that the commenters predominately focused on either the data sources used in the method or raised issues such as incentivizing the provision of care in different geographic areas. However, the latter issue (incentivizing the provision of care) is outside the scope of the statutory requirement that the PE GPCIs reflect the relative costs of the mix of goods and services comprising practice expenses in the different fee schedule areas relative to the national average.

One key component of the PE GPCI method that our analysis identified involved the office expense portion of the PE GPCIs and the cost share weight assigned to this component. Most significantly, we are proposing that the weight for the office rent component be revised from 12.209 percent to 8.410 percent to reflect our more detailed breakout of the types of office expenses that are determined in local markets instead of national markets. For example, for previous GPCI updates, we used the office expenses cost category as the cost share weight for office rent and, therefore, all individual components previously included in the office expenses category were adjusted for local area cost differences by the GPCIs. As discussed in section II.E.1. of this proposed rule, we are proposing to disaggregate the broader office expenses component into 9 new cost categories as part of the proposed CY 2011 MEI rebasing. The disaggregation of the office expenses category indicates that the fixed capital cost category, for which the consumer price index (CPI) for owner's equivalent rent is the price proxy, is the office expense category applicable to the office rent component of the PE GPCI. Therefore, the fixed cost capital cost category is the only component of office expenses that we are proposing to adjust for local area cost differences beginning in CY 2011. We are proposing to assign other newly defined components of the office expenses category (for example, utilities, chemicals, paper, rubber and plastics, telephone, postage, and moveable capital) to the medical equipment, supplies, and other miscellaneous expenses cost component of the PE GPCIs. As discussed later in this section, the medical equipment, supplies, and other miscellaneous expenses component of the PE GPCIs is assumed to have a national market and, therefore, this component is not adjusted for local area cost differences.

The proposed expense categories for the PE GPCIs, along with their respective cost share weights, are primarily derived from the 2006 American Medical Association (AMA) Physician Practice Information Survey (PPIS) for self-employed physicians and selected self-employed non-medical doctor specialties. The PPIS is the most comprehensive, multispecialty, contemporaneous, and consistently collected PE data source available. It was developed by medical organizations and captures the costs of operating a medical practice, including office rents and nonphysician staff wages.

Moreover, we also examined the feasibility of using the American Community Survey (ACS) and the Bureau of Labor and Statistics (BLS) Occupational Employment Statistics (OES) data for the employee compensation component of the PE GPCI. For previous updates, the employee compensation component was based on the 2000 Decennial Census long form data. Since the Census data are significantly outdated and the 2010 Census no longer includes occupational wage data, we believed the ACS or BLS OES data might be viable alternatives. While the ACS 3-year public use microsample (PUMS) is currently available, it reflects only about 3 percent of households and the data exhibit significant variation due to the small sample. In particular, the ACS PUMS has fewer than 10 observations of pharmacists in the Manhattan, Beaumont Texas, and Southern Maine localities. Therefore, we believe it would be premature to use the ACS data for determining GPCI values. The 2006, 2007, and 2008 panels from the BLS OES represent a larger sample than the ACS PUMS and more recent data than the 2000 Census. As such, we are proposing to use the BLS OES data for updating the GPCIs. We look forward to exploring the use of the full ACS data when they become available.

Additionally, we explored other sources of rent data (including commercial rental data and survey data) for use in calculating the PE GPCIs. We could not identify a reliable alternative rental data source available on a national basis with coverage of non-metropolitan areas.

We do not believe there is a national data source better than the Housing and Urban Development (HUD) data for determining the relative cost differences in office rents. Therefore, based on our review of the available data sources, we are proposing to use the 2010 apartment rental data produced by HUD at the 50th percentile as a proxy for the relative cost difference in physician office rents.

We believe our analysis of the current methods of establishing PE GPCIs and our evaluation of data that fairly and reliably establish distinctions in the cost of operating a medical practice in the different fee schedule areas meet the statutory requirements of section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of ACA). A more detailed discussion of our analysis of current methods of establishing PE GPCIs and evaluation of data sources is included in Acumen's draft report. Acumen's draft report and associated analysis of the sixth GPCI update, including the PE GPCIs, will be posted on the CMS Web site after display of this CY 2011 PFS proposed rule. The draft report may be accessed from the PFS Web site at: http://www.cms.gov/PhysicianFeeSched/ under the “Downloads” section of the CY 2011 PFS proposed rule web page.

Determining the Proposed PE GPCI Cost Share Weights

To determine the cost share weights for the proposed CY 2011 GPCIs, we used the proposed 2006-based Medicare Economic Index (MEI) as discussed in section II.E.1. of this proposed rule. The proposed MEI was rebased and revised to reflect the weighted-average annual price change for various inputs needed to provide physicians' services. As discussed in detail in that section, the proposed expense categories in the MEI, along with their respective weights, are primarily derived from data collected in the 2006 AMA PPIS for self-employed physicians and selected self-employed non-medical doctor specialties.

For the cost share weight for the PE GPCIs, we used the 2006-based MEI weight for the PE category of 51.734 percent minus the professional liability insurance category weight of 4.295 percent. Therefore, the proposed cost share weight for the PE GPCIs is 47.439 percent. For the employee compensation portion of the PE GPCIs, we used the nonphysician employee compensation category weight of 19.153 percent. The fixed capital category weight of 8.410, for which the CPI for owner's equivalent rent is the price proxy, was used for the office rent component. To determine the medical equipment, supplies, and other miscellaneous expenses component, we removed professional liability (4.295 percent), nonphysician employee compensation (19.153 percent), and fixed capital (8.410 percent) from the PE category weight (51.734 percent). Therefore, the proposed cost share weight for the medical equipment, supplies, and other miscellaneous expenses component is 19.876 percent.

Furthermore, the physician compensation cost category and its weight of 48.266 percent reflect the proposed work GPCI cost share weight and the professional liability insurance weight of 4.295 percent was used for the malpractice GPCI cost share weight. We believe our analysis and evaluation of the weights assigned to each of the categories within the PE GPCIs meets the statutory requirements of section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of ACA).

The proposed cost share weights for the CY 2011 GPCIs are displayed in Table 22 below.

Table 22—Proposed Cost Share Weights for CY 2011 GPCI Update Back to Top
Expense category Current cost share weight (percent) Proposed cost share weight (percent)
Physician Work 52.466 48.266
Practice Expense 43.669 47.439
—Employee Compensation 18.654 19.153
—Office Rent 12.209 8.410
—Equipment, Supplies, Other 12.806 19.876
Malpractice Insurance 3.865 4.295
Total 100 100

PE GPCI Floor for Frontier States

Section 10324(c) of ACA added a new subparagraph (I) under section 1848(e)(1) of the Act to establish a 1.0 PE GPCI floor for physicians' services furnished in frontier States. In accordance with section 1848(e)(1)(I) of the Act (as added by section 10324(c) of ACA), beginning in CY 2011, we will apply a 1.0 PE GPCI floor for physicians' services furnished in States determined to be frontier States. The statute requires us to define any State as a frontier State if at least 50 percent of the State's counties are determined to be frontier counties, which the statute defines as counties that have a population density less than 6 persons per square mile. However, section 1848(e)(1)(I) of the Act (as added by section 10324(c) of ACA) also specifies that this provision shall not apply to States receiving a non-labor related share adjustment under section 1886(d)(5)(H) of the Act (which excludes Alaska and Hawaii from qualifying as a frontier State).

Consistent with the proposed FY 2011 hospital inpatient prospective payment system (IPPS) 1.0 wage index floor for frontier States (as required by section 10324(a) of the ACA) (75 FR 30920 through 30921), we are proposing to identify frontier counties by analyzing population data and county definitions based upon the most recent annual population estimates published by the U.S. Census Bureau. We divide each county's population total by each county's reported land area (according to the decennial census) in square miles to establish population density. We also are proposing to update this analysis from time to time, such as upon publication of a subsequent decennial census, and if necessary, add or remove qualifying States from the list of frontier States based on the updated analysis.

For a State that qualifies as a frontier State, in accordance with section 1848(e)(1)(I) of the Act (as added by section 10324(c) of the ACA), we are proposing that physicians' services furnished within that State would receive the higher of the applicable PE GPCI value calculated according to the standard CY 2011 methodology or a minimum value of 1.00. Furthermore, in accordance with section 1848(e)(1)(I) of the Act (as added by section 10324(c) of the ACA), the frontier State PE GPCI floor is not subject to budget neutrality and would only be extended to physicians' services furnished within a frontier State.

For determining the proposed CY 2011 PFS PE GPCI values, the frontier States are the following: Montana; Wyoming; North Dakota; Nevada; and South Dakota (as reflected in Table 23).

Table 23—Frontier States Under Section 1848(e)(1)(I) of the Act (as Added by Section 10324( c) of the Affordable Care Act) Back to Top
State Total counties Frontier counties Percent frontier counties
Montana 56 45 80
Wyoming 23 17 74
North Dakota 53 36 68
Nevada 17 11 65
South Dakota 66 34 52

(2) Summary of CY 2011 Proposed PE GPCIs

The PE GPCIs include three components: employee compensation, office rent, and medical equipment, supplies and miscellaneous expenses as discussed below:

(i) Employee Compensation: We used the 2006 through 2008 BLS OES data to determine the proposed employee compensation component of the PE GPCIs. Employee compensation accounts for 40.4 percent of the total PE GPCIs.

(ii) Office Rents: Consistent with the previous GPCI update, we used the most recent residential apartment rental data produced by HUD (2010) at the 50th percentile as a proxy for the relative cost differences in physician office rents. Office rent accounts for 17.7 percent of the PE GPCIs.

(iii) Medical Equipment, Supplies, and other Miscellaneous Expenses: We assumed that items such as medical equipment and supplies have a national market and that input prices do not vary among geographic areas. As discussed in previous GPCI updates in the CY 2005 and CY 2008 PFS proposed rules, specifically the fourth GPCI update (69 FR 47503) and fifth GPCI update (72 FR 38138), respectively, some price differences may exist, but we believe these differences are more likely to be based on volume discounts rather than on geographic market differences. Medical equipment, supplies, and miscellaneous expenses are factored into the PE GPCIs with a component index of 1.000. The medical equipment, supplies, and other miscellaneous expense component are 41.9 percent of the PE GPCIs.

c. Malpractice GPCIs

The malpractice GPCIs are calculated based on insurer rate filings of premium data for $1 million to $3 million mature claims-made policies (policies for claims made rather than services furnished during the policy term). The proposed CY 2011 malpractice GPCI update reflects 2006 and 2007 premium data.

d. General GPCI Update Process

The periodic review and adjustment of GPCIs is mandated by section 1848(e)(1)(C) of the Act. At each update, the proposed GPCIs are published in the PFS proposed rule the year before they would take effect in order to provide an opportunity for public comment and further revisions in response to comments prior to implementation. As mentioned above, the proposed CY 2011 updated GPCIs for the first year of the 2-year transition and summarized GAFs are displayed in Addenda D and E to this proposed rule.

3. Payment Localities

The current PFS locality structure was developed and implemented in 1997. There are currently 89 localities; 34 localities are Statewide areas. There are 52 localities in the other 18 States, with 10 States having 2 localities, 2 States having 3 localities, 1 State having 4 localities, and 3 States having 5 or more localities. The District of Columbia, Maryland, and Virginia suburbs, Puerto Rico, and the Virgin Islands are additional localities that make up the remainder of the total of 89 localities. The development of the current locality structure is described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and the subsequent final rule with comment period (61 FR 59494).

As we have previously noted in the CYs 2008 and 2009 proposed rules (72 FR 38139 and 73 FR 38513), any changes to the locality configuration must be made in a budget neutral manner within a State and can lead to significant redistributions in payments. For many years, we have not considered making changes to localities without the support of a State medical association in order to demonstrate consensus for the change among the professionals whose payments would be affected (with some increasing and some decreasing). However, we have recognized that, over time, changes in demographics or local economic conditions may lead us to conduct a more comprehensive examination of existing payment localities.

For the past several years, we have been involved in discussions with physician groups and their representatives about recent shifts in relative demographics and economic conditions, most notably within the current California payment locality structure. We explained in the CY 2008 PFS final rule with comment period that we intended to conduct a thorough analysis of potential approaches to reconfiguring localities and would address this issue again in future rulemaking. For more information, we refer readers to the CY 2008 PFS proposed rule (72 FR 38139) and subsequent final rule with comment period (72 FR 66245).

As a follow-up to the CY 2008 PFS final rule with comment period, we contracted with Acumen to conduct a preliminary study of several options for revising the payment localities on a nationwide basis. The contractor's interim report was posted on the CMS Web site on August 21, 2008, and we requested comments from the public. The report entitled, “Review of Alternative GPCI Payment Locality Structures,” remains accessible from the CMS PFS Web page under the heading “Interim Study of Alternative Payment Localities under the PFS.” The report may also be accessed directly from the following link: http://www.cms.hhs.gov/PhysicianFeeSched/10_Interim_Study.asp#TopOfPage.

We accepted public comments on the interim report through November 3, 2008. The alternative locality configurations discussed in the report are described briefly below in this section.

Option 1: CMS Core-Based Statistical Area (CBSA) Payment Locality Configuration

This option uses the Office of Management and Budget (OMB's) Metropolitan Statistical Area (MSA) designations for the payment locality configuration. MSAs would be considered as urban CBSAs. Micropolitan Areas (as defined by OMB) and rural areas would be considered as non-urban (rest of State) CBSAs. This approach would be consistent with the IPPS pre-reclassification CBSA assignments and with the geographic payment adjustments used in other Medicare payment systems. This option would increase the number of PFS localities from 89 to 439.

Option 2: Separate High-Cost Counties From Existing Localities (Separate Counties)

Under this approach, higher cost counties are removed from their existing locality structure and they would each be placed into their own locality. This option would increase the number of PFS localities from 89 to 214, using a 5 percent GAF differential to separate high-cost counties.

Option 3: Separate MSAs From Statewide Localities (Separate MSAs)

This option begins with statewide localities and creates separate localities for higher cost MSAs (rather than removing higher cost counties from their existing locality as described in Option 2). This option would increase the number of PFS localities from 89 to 130, using a 5 percent GAF differential to separate high-cost MSAs.

Option 4: Group Counties Within a State Into Locality Tiers Based on Costs (Statewide Tiers)

This option creates tiers of counties (within each State) that may or may not be contiguous but share similar practice costs. This option would increase the number of PFS localities from 89 to 140, using a 5 percent GAF differential to group similar counties into statewide tiers.

As discussed in Acumen's interim report, all four studied alternative locality configurations would increase the number of localities and separate higher cost areas from rural “rest of state” areas. As a result, payments to urban areas would increase, while rural areas would see a decrease in payment because they would no longer be grouped with higher cost “urbanized” areas. A number of public commenters on the draft report expressed support for Option 3 (separate MSAs from Statewide localities) because the commenters believed this alternative would improve payment accuracy over the current locality configuration and could mitigate possible payment reductions to rural areas as compared to Option 1 (CMS CBSAs). Therefore, Acumen is conducting a more in-depth analysis of the dollar impacts that would result from the application of Option 3.

For a detailed discussion of the public comments on the contractor's interim locality study report, we refer readers to the CY 2010 PFS proposed rule (74 FR 33534) and subsequent final rule with comment period (74 FR 61757).

E. PFS Update for CY 2010

1. Rebasing and Revising of the Medicare Economic Index (MEI)

a. Background

The Medicare Economic Index (MEI) is required by section 1842(b)(3) of the Act, which states that prevailing charge levels beginning after June 30, 1973 may not exceed the level from the previous year except to the extent that the Secretary finds, on the basis of appropriate economic index data, that such higher level is justified by year-to-year economic changes. Beginning July 1, 1975, and continuing through today, the MEI has met this requirement by reflecting the weighted-average annual price change for various inputs needed to provide physicians' services. The MEI is a fixed-weight input price index, with an adjustment for the change in economy-wide, private nonfarm business multifactor productivity. This index is comprised of two broad categories: (1) Physician's own time; and (2) physician's practice expense (PE).

The current form of the MEI was detailed in the November 25, 1992 Federal Register (57 FR 55896) and was based in part on the recommendations of a Congressionally-mandated meeting of experts held in March 1987. Since that time, the structure of the MEI has remained essentially unchanged, with three exceptions. First, the MEI was rebased in 1998 (63 FR 58845), which moved the cost structure of the index from 1992 data to 1996 data. Second, the methodology for the productivity adjustment was revised in the CY 2003 PFS final rule (67 FR 80019) to reflect the percentage change in the 10-year moving average of economy-wide private nonfarm business multifactor productivity. Third, the MEI was rebased in 2003 (68 FR 63239), which moved the cost structure of the index from 1996 data to 2000 data.

We are proposing to rebase and revise the MEI and incorporate it into the CY 2011 PFS update. The terms “rebasing” and “revising”, while often used interchangeably, actually denote different activities. Rebasing refers to moving the base year for the structure of costs of an input price index, while revising relates to other types of changes such as changing data sources, cost categories, or price proxies used in the input price index. As is always the case with a rebasing and revising exercise, we have attempted to use the most recently available, relevant, and appropriate information to develop the proposed MEI cost category weights and price proxies. In the following sections of this proposed rule, we detail our proposals regarding the updated cost weights for the MEI expense categories, our rationale for selecting the price proxies in the MEI, and the results of the proposed rebasing and revising of the MEI.

b. Use of More Current Data

The MEI was last rebased and revised in 2003 in the CY 2004 PFS final rule with comment period (68 FR 63239). The current base year for the MEI is 2000, which means that the cost weights in the index reflect physicians' expenses in 2000. However, we believe it is desirable to periodically rebase and revise the index so that the expense shares and their associated price proxies reflect more current conditions. For this reason, we propose to rebase the MEI to reflect appropriate physicians' expenses in 2006.

We are proposing several changes to the expenses that are eligible to be included in the MEI. For instance, we are proposing to remove all costs related to drug expenses as drugs are not paid for under the PFS nor are they included in the definition of “physicians' services” for purposes of the Sustainable Growth Rate (SGR) system that is used to update the PFS. The details of the decision regarding the removal of physician-administered drugs from the SGR system can be found in the CY 2010 PFS proposed rule and finalized in the CY 2010 final rule with comment period (74 FR 33651 and 74 FR 61961, respectively). Additionally, we are proposing to remove costs associated with separately billable supplies. The rationale for removing the separately billable supplies is discussed further below in section III.E.1.X of this proposed rule.

We are proposing to revise the cost categories in the MEI by expanding the Office Expense category into nine detailed categories with additional price proxies associated with these categories. Additionally, we will continue to adjust the MEI for economy-wide multifactor productivity based on the 10-year moving average of total private nonfarm business multi-factor productivity.

c. Rebasing and Revising Expense Categories in the MEI

The MEI is used in conjunction with the SGR system to update the PFS and represents the price component of that update. The proposed expense categories in the index, along with their respective weights, are primarily derived from data collected in the 2006 AMA Physician Practice Information Survey (PPIS) for self-employed physicians and selected self-employed non-Medical Doctor (non-MD) specialties. We included data from the following specialties in the MEI cost weight calculations (optometrists, oral surgeons, podiatrists, and chiropractors) consistent with the definition of the term “physician” in section 1861(r) of the Act. In summary, the term “physician” when used in connection with the performance of functions or actions an individual is legally authorized to perform means the following: (1) A doctor of medicine or osteopathy; (2) a doctor of dental surgery or of dental medicine; (3) a doctor of podiatric medicine; (4) a doctor of optometry; or (5) a chiropractor. For a complete definition, please see section 1861(r) of the Act. We weighted the expense data from the above-referenced specialties with the self-employed physician expense data using physician counts by specialty.

The AMA data from the PPIS were used to determine expenditure weights for total expenses, physicians' earnings, physicians' benefits, employed physician payroll, nonphysician compensation, office expenses, professional liability insurance (PLI), medical equipment, medical supplies, and all other expenses. To further disaggregate into subcategories reflecting more detailed expenses, we used data from the 2002 Bureau of Economic Analysis (BEA) Benchmark Input-Output table (I/O), the 2006 Bureau of the Census Current Population Survey (CPS), the 2006 Bureau of Labor Statistics (BLS) Occupational Employment Survey (OES) and Employment Cost for Employee Compensation Survey (ECEC), and the 2006 Internal Revenue Service (IRS) Statistics of Income (SOI) data. The development of each of the cost categories using these sources is described in detail below.

(1) Developing the Weights for Use in the MEI

Developing a rebased and revised MEI requires selecting a base year and determining the appropriate expense categories. We are proposing to rebase the MEI to CY 2006. We choose CY 2006 as the base year for two primary reasons: (1) CY 2006 is the most recent year for which data were available; and (2) we believe that the CY 2006 data provide a representative distribution of physicians' compensation and PEs.

Compared to the 2000-based MEI, we are proposing to include 9 new cost categories (along with their respective weights) that disaggregate the costs under the broader Office Expenses cost category. The 2000-based MEI did not break these expenses into individual categories. A more detailed discussion is provided below in this section. In addition, we are proposing to exclude the Pharmaceutical cost category as pharmaceuticals are neither paid for under the PFS nor are they included in the definition of “physicians' services” for purposes of calculating the physician update via the SGR system (for more details see the CY 2010 PFS final rule with comment period (74 FR 61961 through 61962)). Lastly, we are proposing to exclude the expenses associated with separately billable supplies since these items are not paid for under the PFS.

We determined the number and composition of expense categories based on the criteria used to develop the current MEI and other CMS input price index expenditure weights. These criteria are timeliness, reliability, relevance, and public availability. Table 24 lists the set of mutually exclusive and exhaustive cost categories that make up the proposed rebased and revised MEI.

Table 24—Proposed 2006 MEI Cost Categories, Weights, and Price Proxies Compared to the 2000 MEI Cost Categories and Weights Back to Top
Cost category Proposed 2006-expense weights 1 2 2000 Expense weights Proposed 2006 price proxies
(1) Due to rounding, weights may not sum to 100.000 percent.
(2) Sources: 2006 Physician Practice Information Survey (PPIS), Center for Health Policy Research, American Medical Association; 2006 Employment Cost for Employee Compensation, U.S. Department of Labor, Bureau of Labor Statistics; 2006 Occupational Employment Statistics (OES), BLS; U.S. Department of Commerce, Bureau of Economic Analysis 2002 Benchmark Input Output Tables, and U.S. Department of Commerce, Bureau of the Census, 2006 Current Population Survey.
(3) Includes employed physician payroll.
(4) Includes paid leave.
(5) Average Hourly Earnings (AHE).
(6) Employment Cost Index (ECI).
(7) Consumer Price Index (CPI).
(8) Producer Price Index (PPI).
Total 100.00 100.000
Physician's Own Time3 48.266 52.466
Wages and Salaries 43.880 42.730 AHE Total Nonfarm Private.5
Benefits 3 4 4.386 9.735 ECI-Benefits Total Nonfarm Private.6
Physician's Practice Expense 51.734 47.534
Nonphysician Employee Compensation 19.153 18.654
Nonphysician Employee Wages and Salaries 13.752 13.809
Prof/Tech Wages 6.006 5.887 ECI-Wages/Salaries: Private Professional &Technical.
Managerial Wages 1.446 3.333 ECI-Wages/Salaries: Private Managerial.
Clerical Wages 4.466 3.892 ECI-Wages/Salaries: Private Clerical.
Services Wages 1.834 0.696 ECI-Wages/Salaries: Private Service.
Nonphysician Employee Benefits4 5.401 4.845 ECI-Ben: Private Blend.
Office Expenses 20.035 12.209
Utilities 1.139 CPI Fuel & Utilities.7
Chemicals 0.679 PPI for Other Basic Organic Chemical Manufacturing PPI325190.8
Paper 0.616 PPI for converted paper.
Rubber & Plastics 0.563 PPI for rubber and plastics.
Telephone 1.415 CPI for Telephone Services.
Postage 0.661 CPI for Postage.
All Other Labor-Related 4.718 ECI Compensation Services Occupations (ECIPCSONS).
Fixed Capital 8.410 CPI for Owner's Equivalent Rent.
Moveable Capital 1.834 PPI for Machinery and Equipment.
PLI 4.295 3.865 CMS-Prof. Liab. Phys. Premiums.
Medical Equipment 1.978 2.055 PPI-Medical Instruments & Equip.
Pharmaceuticals and Medical Materials and Supplies 1.760 4.320
Pharmaceuticals 2.309
Medical Materials and Supplies 1.760 2.011 PPI Surg. Appliances and Supplies/CPI(U) Med Supplies.
Other Professional Expenses 4.513 6.433 CPI-U All Items Less Food and Energy.

The development of each of the cost categories in the proposed 2006 MEI is described, in detail, below.

(2) Physician's Own Time

The component of the MEI that reflects the physician's own time is represented by the net income portion of business receipts. The proposed 2006 cost weight associated with the physician's own time (otherwise referred to as the Physician's Compensation cost weight) is based on 2006 AMA PPIS data for mean physician net income (physician compensation) for self-employed physicians and for the selected self-employed specialties referenced previously in this rule.

We are proposing to continue to add employed physician compensation to self-employed physician compensation in order to calculate an aggregate Physician Compensation cost weight. By including the compensation of employed physicians in the physician compensation expense category, these expenses will be adjusted by the appropriate price proxies for a physician's own time. The proposed 2006 Physician Compensation cost weight is 48.266 percent as compared to a 52.466 percent share in the 2000-based MEI. We split the physician compensation component into subcategories: Wages & Salaries and Benefits. For Physician Compensation, the ratio for Wages & Salaries and Benefits was calculated using data from the PPIS. Self-employed physician wages & salaries accounted for 92.3 percent of physician earnings while physician benefits accounted for the remaining 7.8 percent. For employed physician payroll, the distribution for wages & salaries and benefits for 2006 was 85.8 percent and 14.2 percent, respectively. This ratio was determined by calculating a weighted average of available SOI data for partnerships, corporations, and S-corporations specific to physicians and outpatient care centers. Based on these proposed methods, the proposed 2006 Physician Wages & Salaries cost weight is 43.880 percent and the proposed 2006 Physician Benefits cost weight is 4.386 percent.

(3) Physician's Practice Expenses

To determine the remaining individual Practice Expenses cost weights, we use mean expense data from the 2006 PPIS survey. The detailed explanations for the derivation of the individual weights under Practice Expenses are listed below.

(A) Nonphysician Employee Compensation

The cost weight for Nonphysician Employee Compensation was developed using the 2006 AMA PPIS mean expenses for these costs. We further divided this cost share into Wages & Salaries and Benefits using 2006 BLS Employer Costs for Employee Compensation (ECEC) data for the Health Care and Social Assistance (private industry). Although this survey does not contain data specifically for offices of physicians, data are available to help determine the shares associated with wages & salaries and benefits for private industry health care and social assistance services (which include hospitals, nursing homes, offices of physicians, and offices of dentists). We believe these data provide a reasonable estimate of the split between wages and benefits for employees in physicians' offices. Data for 2006 in the ECEC for Health Care and Social Assistance indicate that wages and benefits are 71.8 percent and 28.2 percent of compensation, respectively. The 2000-based MEI included a wage and benefit split of 74.0 percent and 26.0 percent of compensation.

As in the 2000-based MEI, we are proposing to use 2006 Current Population Survey (CPS) data and 2006 BLS Occupational Employment Statistics (OES) data to develop cost weights for wages for nonphysician occupational groups. We determined total annual earnings for offices of physicians using employment data from the CPS and mean annual earnings from the OES. To arrive at a distribution for these separate categories, we determined annual earnings for each of the four categories (which are Professional & Technical workers, Managers, Clerical workers, and Service workers), using the Standard Occupational Classification (SOC) system. We then determined the overall share of the total for each. The proposed distribution, as well as the distribution from the 2000-based MEI are presented in Table 25.

Table 25—Percent Distribution of Nonphysician Payroll Expense by Occupational Group: 2006 and 2000 Back to Top
BLS Occupational Group 2006 Expenditure shares 2000 Expenditure shares
Values may not sum to 100 due to rounding.
Total 100.000 100.000
Professional & Technical Workers 43.671 42.635
Managers 10.517 24.138
Clerical Workers 32.477 28.187
Service Workers 13.336 5.040

The decrease in the Management expenditure share is directly related to a decrease in the total number of employees in Management occupations in physicians' offices, in particular, “Medical and health service managers.” The decrease in expenditure share may also be due, in part to the methods used in this rebasing. That is, for the 2006-based MEI, we are using data limited to “Offices of physicians.” In the 2000-based version of the index, the only data that were available to inform these estimates were inclusive of physician offices and clinics (“Offices of physicians and clinics”). An examination of 2006 CPS and OES data comparing “Outpatient care centers” to “Offices of physicians” indicates that there is a higher share of management occupations in the “Outpatient care centers” than in “Offices of physicians.”

The increase in the Service Workers expenditures share is attributable to a substantive increase in the number of employees in service occupations, particularly, “Medical assistants and other health care support occupations”.

(B) Office Expenses

The aggregate Office Expenses cost weight was derived using the 2006 AMA PPIS and is explained in more detail below in this section. This calculation resulted in a 20.035 percent share of total costs in 2006 compared to a 12.209 percent share in the 2000-based index.

For the 2006-based MEI, we propose to further disaggregate the Office Expenses into more detailed cost categories using the BEA 2002-Benchmark I/O data for Offices of physicians, dentists, and other health practitioners (NAICS 621A00). We used this data to develop the nine detailed 2002 costs weights as a percent of total office expenses, as measured by the BEA I/O data. The total Office Expenses cost category was calculated by matching the BEA I/O data as closely as possible to the AMA survey data, the latter of which defined office expenses as “office (non-medical) equipment and office (non-medical) supplies, as well as rent, mortgage, interest, maintenance, refrigeration, storage, security, janitorial, depreciation on medical buildings used in your practice, utilities, or other office computer systems (including information management systems/electronic medical record systems) and telephone.”

We then aged the 2002 weights forward to 2006 to derive the 2006 detailed office expense cost weights as a percent of total Office Expenses. The methodology we used to age the data forward involved applying the annual price changes from each respective price proxy to the appropriate cost categories. We repeated this practice for each year of the interval. We then applied the resulting 2006 distributions to the aggregate 2006 AMA Office Expenses weight to yield the detailed 2006 Office Expenses' weights as a percent of total expenses.

We are proposing to introduce these new, more detailed weights for the 2006-based index based on our intent to derive an increased level of precision while maintaining appropriate levels of aggregation in the market basket. The proposed proxies are described in section X. of this proposed rule. The following is a description of what is included in each of the detailed cost categories.

  • Utilities: The Utilities cost weight includes expenses classified in the fuel, oil and gas, water and sewage, and electricity industries. The proposed cost weight for utilities is 1.139 percent.
  • Paper: The Paper cost weight includes expenses classified in the paper (including but not limited to paper, paperboard, and sanitary paper products) and printing industries. The proposed cost weight for paper is 0.616 percent.
  • Chemicals: The Chemicals cost weight includes expenses classified in the basic organic and inorganic chemical manufacturing industry (accounting for about 45 percent of the chemical expenses), as well as other chemical industries including but not limited to industrial gas manufacturing and all other chemical product manufacturing. The proposed cost weight for chemicals is 0.679 percent.
  • Rubber and Plastics: The Rubber and Plastics cost weight includes expenses classified in the rubber and plastic industries, including but not limited to, urethane and other foam product manufacturing and other plastic and rubber manufacturing industries. The proposed cost weight for Rubber and Plastics is 0.563 percent.
  • Telephone: The telephone cost weight includes expenses classified in the telecommunications (accounting for the majority of the telephone expenses) and cable industries. The proposed cost weight for Telephone services is 1.415 percent.
  • Postage: The Postage cost weight includes postal service expenses. The proposed cost weight for Postage is 0.661 percent.
  • All Other Services: The All Other Services cost weight includes other service expenses including, but not limited to, nonresidential maintenance and repair, machinery repair, janitorial, and security services. This cost weight does not include expenses associated with professional services such as accounting, billing, legal and marketing which are included in the All Other Expenses cost weight derived using the AMA PPIS survey. The proposed cost weight for All Other Services is 4.718 percent.
  • Fixed Capital: The Fixed Capital cost weight includes expenses for building leases and depreciation. The proposed cost weight for Fixed Capital is 8.410 percent.
  • Moveable Capital: The Moveable Capital cost weight includes expenses for non-medical equipment including but not limited to, computer equipment and software, as well as the rental and leasing of automotive and industrial machinery equipment. The proposed cost weight for Moveable Capital is 1.834 percent.

(C) Professional Liability Insurance (PLI) Expense

The weight for PLI expense was derived from the 2006 AMA survey and was calculated as the mean PLI expense expressed as a percentage of total expenses. This calculation resulted in a 4.513 percent share of total costs in 2006 compared to a 3.865 percent share in the 2000-based index. The increase in the weight for PLI reflects the current prices of premiums, as well as an update to the level of coverage purchased by physicians in 2006 compared to 2000.

(D) Medical Equipment Expenses

The proposed weight for Medical Equipment was calculated using the 2006 AMA PPIS mean expense data. This calculation resulted in a 1.978 percent share of total costs in 2006 compared to a 2.055 percent share in the 2000-based index. By definition, this category includes the expenses related to depreciation, maintenance contracts, leases/rental of medical equipment used in diagnosis or treatment of patients. The category would also include the tax-deductible portion of the purchase price or replacement value of medical equipment, if not leased.

(E) Medical Supplies Expenses

The proposed weight for Medical Supplies was calculated using the 2006 AMA PPIS mean expense data. This calculation resulted in a 1.760 percent share of total costs in 2006 compared to a 2.011 percent share in the 2000-based index. By definition, this category includes the expenses related to medical supplies such as sterile gloves, needles, bandages, specimen containers, and catheters. Additionally, we are proposing to exclude the expenses related to separately billable supplies as these expenses are not paid for under the PFS. The Medical Supply cost category does not include expenses related to drugs.

(F) All Other Professional Expenses

The proposed weight for All Other Professional expenses was calculated using the 2006 AMA PPIS mean expense data. This calculation resulted in a 4.513 percent share of total costs in 2006 compared to a 6.433 percent share in the 2000-based index. By definition, this category includes the expenses related to tax-deductible expenses for any other expenses not reported in another category from the PPIS. These expenses would include fees related to legal, marketing, accounting, billing, office management services, professional association memberships, maintenance of certification or licensure, journals and continuing education, professional car upkeep and depreciation, and any other professional expenses not reported elsewhere on the PPIS.

d. Selection of Price Proxies for Use in the MEI

After the proposed 2006 cost weights for the rebased and revised MEI were developed, we reviewed all of the price proxies to evaluate their appropriateness. As was the case in the development of the 2000-based MEI (68 FR 63239), most of the proxy measures we considered are based on BLS data and are grouped into one of the following five categories:

  • Producer Price Indices (PPIs): PPIs measure price changes for goods sold in markets other than retail markets. These fixed-weight indexes are a measure of price change at the intermediate or final stage of production. They are the preferred proxies for physician purchases as these prices appropriately reflect the product's first commercial transaction.
  • Consumer Price Indices (CPIs): CPIs measure change in the prices of final goods and services bought by consumers. Like the PPIs, they are fixed-weight indexes. Since they may not represent the price changes faced by producers, CPIs are used if there are no appropriate PPIs or if the particular expenditure category is likely to contain purchases made at the final point of sale.
  • Average Hourly Earnings (AHEs): AHEs are available for production and nonsupervisory workers for specific industries, as well as for the nonfarm business economy. They are calculated by dividing gross payrolls for wages & salaries by total hours. The series reflects shifts in employment mix and, thus, is representative of actual changes in hourly earnings for industries or for the nonfarm business economy.
  • ECIs for Wages & Salaries: These ECIs measure the rate of change in employee wage rates per hour worked. These fixed-weight indexes are not affected by employment shifts among industries or occupations and thus, measure only the pure rate of change in wages.
  • ECIs for Employee Benefits: These ECIs measure the rate of change in employer costs of employee benefits, such as the employer's share of Social Security taxes, pension and other retirement plans, insurance benefits (life, health, disability, and accident), and paid leave. Like ECIs for wages & salaries, the ECIs for employee benefits are not affected by employment shifts among industries or occupations.

When choosing wage and price proxies for each expense category, we evaluate the strengths and weaknesses of each proxy variable using the following four criteria.

  • Relevance: The price proxy should appropriately represent price changes for specific goods or services within the expense category. Relevance may encompass judgments about relative efficiency of the market generating the price and wage increases.
  • Reliability: If the potential proxy demonstrates a high sampling variability, or inexplicable erratic patterns over time, its viability as an appropriate price proxy is greatly diminished. Notably, low sampling variability can conflict with relevance—since the more specifically a price variable is defined (in terms of service, commodity, or geographic area), the higher the possibility of high sampling variability. A well-established time series is also preferred.
  • Timeliness of actual published data: For greater granularity and the need to be as timely as possible, we prefer monthly and quarterly data to annual data.
  • Public availability: For transparency, we prefer to use data sources that are publicly available.

The BLS price proxy categories previously described meet the criteria of relevance, reliability, timeliness, and public availability. Below we discuss the proposed price-wage proxies for the rebased and revised MEI (as shown in Table 23).

(1) Expense Categories in the MEI

(A) Physician's Own Time (Physician Compensation)

In the proposed revised and rebased MEI, we are using the AHE for the private nonfarm economy as the proxy for the Physician Wages & Salaries component (BLS series code: CEU0500000008).

As discussed extensively in the November 2, 1998 final rule (63 FR 58848), and again in the December 31, 2002 final rule (67 FR 80019), we believe that this price proxy represents the most appropriate proxy for use in the MEI. The AHE for the nonfarm business economy reflects the impacts of supply, demand, and economy-wide productivity for the average worker in the economy. As such, use of this proxy is consistent with the original legislative intent that the change in the physicians' earnings portion of the MEI follow the change in general earnings for the economy. Since earnings are expressed per hour, a constant quantity of labor input per unit of time is reflected. Finally, the use of the AHE data is also consistent with our using the BLS economy-wide private nonfarm business sector multifactor productivity measures since economy-wide wage increases reflect economy-wide productivity increases.

The current 2000-based MEI uses the ECI for Total Benefits (BLS series code: CIU2030000000000I) for total private industry as the price proxy for Physician Benefits. We are proposing to use the same proxy for the 2006-based MEI. This means that both the wage and benefit proxies for physician earnings are derived from the private nonfarm business sector and are computed on a per-hour basis.

(B) Nonphysician Employee Compensation

For the 2006-based MEI, we are proposing to use Current Population Survey (CPS) data on employment by occupation and earnings from the BLS Occupational Employment Statistics for NAICS 6211, Office of Physicians, to develop labor cost shares for the nonphysician occupational groups shown in Table 23. The 2000-based MEI was based on CPS data for the Standard Industrial Classification 801 and 803, which included both office of physicians and outpatient care centers. Beginning in 2003, BLS began publishing CPS data on a NAICS basis which provided data for office of physicians (NAICS 6211)and outpatient care centers (NAICS 6214) separately. We believe using data for office of physicians is appropriate for the 2006-based MEI. The BLS maintains an ECI for each selected industry group. We propose to use these ECIs as price proxies for nonphysician employee wages in the same manner they are used in the current MEI.

As described in the CY 2008 PFS proposed rule (72 FR 38190), as a result of the discontinuation of the White Collar Benefit ECI for private workers, we are currently using a composite ECI benefit index. We are proposing to continue to use the composite ECI for nonphysician employees in the proposed rebased and revised MEI; however, we are proposing to revise the weights within that blend in order to reflect the more recent 2006 data. Table 26 lists the four ECI series and corresponding weights used to construct the 2006 composite benefit index.

Table 26—CMS Composite Price Index for Nonphysician Employee Benefits Back to Top
ECI series 2006 Weight (%)
Benefits, Private, Professional & Related 44
Benefits, Private, Management, Business, Financial 11
Benefits, Private, Office & Administrative Support 32
Benefits, Private, Service Occupations 13

(C) Utilities

For the 2006-based MEI, we are proposing to use the CPI for Fuel and Utilities (BLS series code #CUUR0000SAH2) to measure the price growth of this cost category. This cost category was not broken-out separately in the 2000-based MEI.

(D) Chemicals

For the 2006-based MEI, we are proposing to use the PPI for Other Basic Organic Chemical Manufacturing (BLS series code #PCU32519-32519) to measure the price changes of this cost category. We are proposing this industry-based PPI because BEA's 2002 benchmark I/O data show that the majority of the office of physicians' chemical expenses are attributable to Other Basic Organic Chemical Manufacturing (NAICS 32519). This cost category was not broken-out separately in the 2000-based MEI.

(E) Paper

For the 2006-based MEI, we are proposing to use the PPI for Converted Paper and Paperboard (BLS series code #WPU0915) to measure the price growth of this cost category. This cost category was not broken-out separately in the 2000-based MEI.

(F) Rubber and Plastics

For the 2006-based MEI, we are proposing to use the PPI for Rubber and Plastic Products (BLS series code #WPU07) to measure the price growth of this cost category. This cost category was not broken-out separately in the 2000-based MEI.

(G) Telephone

For the 2006-based MEI, we are proposing to use the CPI for Telephone Services (BLS series code #CUUR0000SEED) to measure the price growth of this cost category. This cost category was not broken-out separately in the 2000-based MEI.

(H) Postage

For the 2006-based MEI, we are proposing to use CPI for Postage (BLS series code #CUUR0000SEEC01) to measure the price growth of this cost category. This cost category was not broken-out separately in the 2000-based MEI.

(I) All Other Services

For the 2006-based MEI, we are proposing to use the ECI for Compensation for Service Occupations (private industry) (BLS series code #CIU2010000300000I) to measure the price growth of this cost category. This cost category was not broken-out separately in the 2000-based MEI.

(J) Fixed Capital

For the 2006-based MEI, we are proposing to use the CPI for Owner's Equivalent Rent (BLS series code #CUUS0000SEHC) to measure the price growth of this cost category. This price index represents about 50 percent of the CPI for Housing which was used to in the 2000-based MEI to proxy total office expenses.

(K) Moveable Capital

For the 2006-based MEI, we are proposing to use the PPI for Machinery and Equipment (series code #WPU11) to measure the price growth of this cost category. This cost category was not broken-out separately in the 2000-based MEI.

(L) Professional Liability Insurance

In order to accurately reflect the price changes associated with PLI, each year, we solicit PLI premium data for physicians from a sample of commercial carriers. This information is not collected through a survey form, but instead is requested directly from, and provided by (on a voluntary basis), several national commercial carriers. As we require for our other price proxies, the professional liability price proxy is intended to reflect the pure price change associated with this particular cost category. Thus, it does not include changes in the mix or level of liability coverage. To accomplish this result, we obtain premium information from a sample of commercial carriers for a fixed level of coverage, currently $1 million per occurrence and a $3 million annual limit. This information is collected for every State by physician specialty and risk class. Finally, the State-level, physician-specialty data are aggregated by effective premium date to compute a national total, using counts of physicians by State and specialty as provided in the AMA publication, Physician Characteristics and Distribution in the U.S.

The resulting data provide a quarterly time series, indexed to a base year consistent with the MEI, and reflect the national trend in the average professional liability premium for a given level of coverage, generally $1 million/$3 million of claims-made mature policies. From this series, quarterly and annual percent changes in PLI are estimated for inclusion in the MEI.

The most comprehensive data on professional liability costs are held by the State insurance commissioners, but these data are available only with a substantial time lag and hence, the data currently incorporated into the MEI are much timelier. We believe that, given the limited data available on professional liability premiums, the information and methodology described above adequately reflect the PLI price trends facing physicians.

(M) Medical Equipment

The Medical Equipment cost category includes depreciation, leases, and rent on medical equipment. We are proposing to use the PPI for Medical Instruments and Equipment (BLS series code: WPU1562) as the price proxy for this category, consistent with the price proxy used in the 2000-based MEI and other CMS input price indexes.

(N) Medical Materials and Supplies

As is used in the 2000-based MEI, we are proposing to use a blended index comprised of 50/50 blend of the PPI Surgical Appliances (BLS series code: WPU156301) and the CPI-U for Medical Equipment and Supplies (BLS series code: CUUR0000SEMG). We believe physicians purchase the types of supplies contained within these proxies, including such items as bandages, dressings, catheters, I.V. equipment, syringes, and other general disposable medical supplies, via wholesale purchase, as well as at the retail level. Consequently, we are proposing to combine the two aforementioned indexes to reflect those modes of purchase.

(O) Other Professional Expenses

This category includes the residual subcategory of other professional expenses such as accounting services, legal services, office management services, continuing education, professional association memberships, journals, professional car expenses, and other professional expenses. Given this heterogeneous mix of goods and services, we are proposing to use the CPI-U for All Items Less Food and Energy, consistent with the price proxy used in the 1996 and 2000-based MEI.

(2) Productivity Adjustment to the MEI

The MEI has been adjusted for changes in productivity since its inception. In the CY 2003 PFS final rule (67 FR 80019), we implemented a change in the way the MEI was adjusted to account for those changes in productivity The MEI used for the 2003 physician payment update incorporated changes in the 10-year moving average of private nonfarm business (economy-wide) multifactor productivity that were applied to the entire index. Previously, the index incorporated changes in productivity by adjusting the labor portions of the index by the 10-year moving average of economy-wide private nonfarm business labor productivity.

We are proposing to continue to use the current method for adjusting the full MEI for multifactor productivity in the rebased and revised MEI.

As described in the CY 2003 PFS final rule, we believe this adjustment is appropriate because it explicitly reflects the productivity gains associated with all inputs (both labor and non-labor). We believe that using the 10-year moving average percent change in economy-wide multifactor productivity is appropriate for deriving a stable measure that helps alleviate the influence that the peak (or a trough) of a business cycle may have on the measure. The adjustment will be based on the latest available historical economy-wide nonfarm business multifactor productivity data as measured and published by BLS.

e. Results of Rebasing

Table 27 illustrates the results of updating the MEI from the following changes to the weights for the Physician Compensation, Practice Expenses (excluding PLI), and PLI.

Table 27—Percent Distribution of Selected Physician Expenses Used To Calibrate RVUs: CYs 2006 and 2000 Back to Top
CY 2006 weight (%) CY 2000 weight (%)
Physician Compensation (Own Time) 48.266 52.466
Practice Expenses (less PLI) 47.439 43.669
PLI 4.295 3.865

The rebased and revised MEI has several differences as compared to the 2000-based MEI; these changes have been discussed in detail in prior sections of this rule. Table 28 shows the average calendar year percent change from CY 2004 to CY 2011 for both the 2000- and 2006-based MEIs. The 2006-based MEI annual percent changes differ from the 2000-based MEI annual percent changes by 0.0 to 0.8 percentage point. In the 5 most recent years (CYs 2007-2011), the annual percent change in the rebased and revised MEI was within 0.3 percentage point of the percent change in the 2000-based MEI. In the earlier years, there were bigger differences between the annual percent change in the rebased and revised MEI and the 2000-based MEI. The majority of these differences can be attributed to the lower benefit cost weight, as measured by the 2006 AMA data, and the exclusion of the drug cost weight. The remaining differences are attributable to the higher cost weight for PLI, as measured by the 2006 AMA data.

Table 28—Annual Percent Change in the Current and Proposed Revised and Rebased MEI Back to Top
Update year A Proposed 2006-based MEI Current 2000-based MEI
A Update year based on historical data through the second quarter of the prior calendar year. For example, the 2010 update is based on historical data through the second quarter 2009.
B Based on the 1st quarter 2010 forecast by HIS Global Insight. With historical data through the 4th quarter 2009.
CY 2004 2.4 2.7
CY 2005 2.1 2.9
CY 2006 2.0 2.5
CY 2007 1.7 2.0
CY 2008 1.9 1.8
CY 2009 1.7 1.7
CY 2010 1.4 1.2
CY 2011 B 0.3 0.3
Avg. Change for CYs 2004-2011 1.7 1.9

As shown in Table 29, the projection of the proposed rebased and revised MEI for the CY 2011 PFS proposed rule is an increase of 0.3 percent, identical to the projected increase using the 2000-based MEI. In the CY 2011 PFS final rule, we will incorporate historical data through the second quarter of 2010; therefore, the current estimated increase of 0.3 percent for 2011 may differ in the final rule.

Table 29—Forecasted Annual Percent Change in the Current and Proposed Revised and Rebased MEI for CY 2011 Back to Top
Proposed 2006-based MEI 2000-based MEI
CY 2011 0.3 0.3
Table 30—Forecasted Annual Percent Change in the Proposed Revised and Rebased MEI CY 2011, All Categories1 Back to Top
Cost categories 2006 Weight2 (%) Projected CY 2011 percent changes
1The forecasts are based upon the latest available Bureau of Labor Statistics data as of December 2009.
2The weights shown for the MEI components are the 2006 base-year weights, which may not sum to subtotals or totals because of rounding. The MEI is a fixed-weight, Laspeyres-type input price index whose category weights indicate the distribution of expenditures among the inputs to physicians' services for CY 2006. To determine the MEI level for a given year, the price proxy level for each component is multiplied by its 2006 weight. The sum of these products (weights multiplied by the price index levels) overall cost categories yields the composite MEI level for a given year. The annual percent change in the MEI levels is an estimate of price change over time for a fixed market basket of inputs to physicians' services.
3The measures of productivity, average hourly earnings, Employment Cost Indexes, as well as the various Producer and Consumer Price Indexes can be found on the Bureau of Labor Statistics Web site at http://stats.bls.gov.
4Derived from a CMS survey of several major commercial insurers N/A Productivity is factored into the MEI categories as an adjustment to the price variables; therefore, no explicit weight exists for productivity in the MEI.
MEI Total, productivity adjusted 100.000 0.3
Productivity: 10-year moving average of MFP N/A 1.3
MEI Total, without productivity adjustment 100.000 1.6
Physician Compensation (Own Time)3 48.266 2.4
Wages and Salaries 43.880 2.5
Benefits 4.386 1.5
Practice Expenses 51.734 0.9
Nonphysician Compensation 19.153 1.5
Nonphysician Wages 13.752 1.5
P&T 6.006 1.2
Management 1.446 1.0
Clerical 4.466 1.8
Services 1.834 2.0
Nonphysician Benefits 5.401 1.4
Other Practice Expenses 26.308 0.4
Office Expenses 20.035 0.8
Utilities 1.139 −3.0
Chemicals 0.679 −1.1
Paper 0.616 −1.0
Rubber & Plastics 0.563 −0.7
Telephone 1.415 1.1
Postage 0.661 5.5
All Other Services 4.718 2.0
Fixed Capital 8.410 0.9
Moveable Capital 1.834 −0.1
PLI4 4.295 −2.2
Medical Equipment 1.978 0.8
Medical supplies 1.760 0.5
All Other Expenses 4.513 1.4

In addition to the proposed revisions to the MEI mentioned earlier in this section, we are also proposing to convene a technical advisory panel later this year to review all aspects of the MEI, including the inputs, input weights, price-measurement proxies, and productivity adjustment. We will ask the panel to assess the relevance and accuracy of these inputs to current physician practices. The panel's analysis and recommendations will be considered in future rule making to ensure that the MEI accurately and appropriately meets its intended statutory purpose. We are requesting comments from the physician community and other interested members of the public on any other specific issues that should be considered by the technical panel.

f. Adjustments to the RVU Shares To Match the Proposed Rebased MEI Weights

As described in the previous section, we are proposing to rebase the MEI for CY 2011 based on the most current data and establish new weights for physician work, PE, and malpractice under the MEI. As stated in the previous section, the MEI was rebased to a CY 1996 base year beginning with the CY 1999 MEI (63 FR 58845), and to a CY 2000 base year beginning with the CY 2004 MEI (68 FR 63239). For both the CY 1999 and CY 2004 rebasing, we made adjustments to ensure that our estimates of aggregate PFS payments for work, PE, and malpractice were in proportion to the weights for these categories in the rebased MEI (63 FR 58829 and 69 FR 1095).

Consistent with our past practice when the MEI has been rebased, we are proposing to make adjustments to ensure that estimates of aggregate CY 2011 PFS payments for work, PE, and malpractice are in proportion to the weights for these categories in the rebased CY 2011 MEI.

Our proposal would necessitate increasing the proportion of aggregate CY 2011 PFS payments for PE and malpractice and decreasing the proportion for work. This could be accomplished by applying adjustments directly to the work, PE, and malpractice RVUs. However, we are cognizant of the public comments made during prior rulemaking on issues related to scaling the work RVUs. Many commenters have indicated a preference for the work RVUs to remain stable over time and for any necessary adjustments that would otherwise be made broadly to the work RVUs to be accomplished in an alternative manner. For example, in past 5-Year Reviews of the work RVUs, many commenters have cited stability in the work RVUs, among other reasons, in their requests that any required budget neutrality adjustments not be made directly to the work RVUs. Given these prior comments, we are proposing to make the necessary MEI rebasing adjustments without adjusting the work RVUs. Instead, we are proposing to increase the PE RVUs by an adjustment factor of 1.168 and the malpractice RVUs by an adjustment factor of 1.413. The RVUs in Addendum B to this proposed rule reflect the application of these adjustment factors. We note that an application of the 1.413 adjustment factor to the malpractice RVUs for services with malpractice RVUs of 0.01 will, due to rounding, result in malpractice RVUs of 0.01.

Section 1848(c)(2)(B)(ii)(II) of the Act requires that changes to RVUs cannot cause the amount of expenditures for a year to differ by more than $20 million from what expenditures would have been in the absence of the changes. Therefore, as required by section 1848(c)(2)(B)(ii) of the Act, we are proposing to make an adjustment of 0.921 to the CY 2011 conversion factor to ensure that the 1.168 adjustment to the PE RVUs and the 1.413 adjustment to the malpractice RVUs do not cause an increase in CY 2011 PFS expenditures. The current law estimate of the CY 2011 CF is $26.6574.

III. Code-Specific Issues for the PFS Back to Top

A. Therapy Services

1. Outpatient Therapy Caps for CY 2011

Section 1833(g) of the Act applies an annual, per beneficiary combined cap on expenses incurred for outpatient physical therapy and speech-language pathology services under Medicare Part B. A similar separate cap for outpatient occupational therapy services under Medicare Part B also applies. The caps do not apply to expenses incurred for therapy services furnished in an outpatient hospital setting. The caps were in effect during 1999, from September 1, 2003 through December 7, 2003, and beginning January 1, 2006. The caps are a permanent provision, that is, there is no end date specified in the statute for therapy caps. Beginning January 1, 2006, the Deficit Reduction Act (Pub. L. 109-171) (DRA) provided for exceptions to the therapy caps until December 31, 2006. The exceptions process for therapy caps has been extended through December 31, 2009 pursuant to three subsequent amendments (in MEIA-TRHCA, MMSEA, and MIPPA).

Section 1833(g)(5) of the Act (as amended by section 3103 of the ACA) extended the exceptions process for therapy caps through December 31, 2010. We will announce the amount of the therapy cap for CY 2011 in the CY 2011 PFS final rule with comment period. The annual change in the therapy cap is computed by multiplying the cap amount for CY 2010, which is $1,860, by the MEI for CY 2011, and rounding to the nearest $10. This amount is added to the CY 2010 cap to obtain the CY 2011 cap. The agency's authority to provide for exceptions to therapy caps (independent of the outpatient hospital exception) will expire on December 31, 2010, unless the Congress acts to extend it. If the current exceptions process expires, the caps will be applicable in accordance with the statute, except for services furnished and billed by outpatient hospitals.

2. Alternatives to Therapy Caps

a. Background

In section 4541 of the Balanced Budget Act of 1997 (Pub. L. 105-33) (BBA), the Congress enacted the financial limitations on outpatient therapy services (the “therapy caps” discussed above for physical therapy, occupational therapy, and speech-language pathology). At the same time, the Congress requested that the Secretary submit a Report to Congress that included recommendations on the establishment of a revised coverage policy for outpatient physical therapy services and outpatient occupational therapy services under the statute. The Balanced Budget Refinement Act of 1999 (Pub. L. 106-113) (BBRA) placed the first of a series of moratoria on implementation of the limits. In addition, it required focused medical review of claims and revised the report requirements in section 4541(d)(2) of the BBA to request a report that included recommendations on the following: (A) The establishment of a mechanism for assuring appropriate utilization of outpatient physical therapy services, outpatient occupational therapy services, and speech-language pathology services; and (B) the establishment of an alternative payment policy for such services based on classification of individuals by diagnostic category, functional status, prior use of services (in both inpatient and outpatient settings), and such other criteria as the Secretary determines appropriate, in place of the limits.

In 1999, therapy services were not defined, but services documented as therapy were billed and reported when furnished by a variety of individuals in many different settings. These services were not identified in a way that would allow analysis of utilization or development of alternative payment policies.

We have studied therapy services with the assistance of a number of contractors over the past 11 years. Reports of these projects are available on the CMS Web site at http://www.cms.gov/TherapyServices/. On November 9, 2004, we delivered the Report to Congress, Number 137953, “Medicare Financial Limitations on Outpatient Therapy Services” that referenced two utilization analyses. We periodically updated the utilization analyses and posted other contracted reports in order to further respond to the requirements of the BBRA. Subsequent reports highlighted the expected effects of limiting services in various ways and presented plans to collect data about patient condition using available tools. The general belief was that if patient condition could be reliably determined, an objective payment policy could be developed that would ensure appropriate payment for appropriately utilized services.

Over the past decade, significant progress has been made in identifying the outpatient therapy services that are billed to Medicare, the demographics of the beneficiaries who utilize those services, the types of services, the HCPCS codes used to bill the services, the allowed and paid amounts of the services, and the settings, geographic locations, and provider types where services are furnished.

Some of the information that is necessary to ensure appropriate utilization and develop objective and equitable payment alternatives to therapy caps based on patient condition has proven difficult to develop. The influence of prior use of inpatient services on outpatient use of therapy services was not accessible due to systems issues and differences in the policies, billing, and reporting practices for inpatient and outpatient therapy services. The weakness of the ICD-9-CM diagnostic codes in describing the condition of the rehabilitation patient obscured analyses of claims to assess the need for therapy services. The primary diagnosis on the claim is a poor predictor for the type and duration of therapy services required, which complicates assignment of patient cohorts for analysis. Although changes to the guidance in the Medicare Benefit Policy Manual (Pub. 100-02) on documentation of therapy services in 2005 improved the consistency of records and facilitated chart review, it became increasingly obvious that neither claims analysis nor chart review could serve as a reliable and valid method to determine a patient's need for services or to form the basis for equitable payment. We concluded that in order to develop alternative payment approaches to the therapy caps, we needed a method to identify patients with similar risk-adjusted conditions (cohorts) and then we would identify the therapy services that are necessary for the patients to attain the best outcomes with the most efficient use of resources.

While we studied therapy utilization, a number of proprietary tools were developed by researchers in the professional community to assess the outcomes of therapy. Some tool sponsors collected sufficient information to predict with good reliability the amount or length of treatment that would result in the best expected outcomes. We encouraged the use of these proprietary tools in manual instructions, but proprietary tools do not serve CMS' purposes because modification of proprietary tools may only be done by the tool sponsor. There now are some versions of the tools in the public domain and they are being utilized widely to identify patient conditions and, by some insurers, to pay for efficient and effective treatment. Examples of such tools including the National Outcomes Measurement System (NOMS) by the American Speech-Language Hearing Association and Patient Inquiry by Focus On Therapeutic Outcomes, Inc. (FOTO).

In 2006, Focus on Therapeutic Outcomes, Inc. delivered to CMS a report titled, “Pay for Performance for Physical Therapy and Occupational Therapy,” which is also available on the CMS Web site at http://www.cms.gov/TherapyServices. The purpose of this project was to simulate a pay-for-performance implementation, designed to align financial incentives with the achievement of better clinical outcomes from services that were delivered efficiently. The project, funded by HHS/CMS Grant #18-P-93066/9-01, demonstrated the predictive validity of the risk-adjusted pay-for-performance model and the feasibility of reducing payments without affecting services to beneficiaries who need them.

b. Current Activities

The Tax Relief and Health Care Act of 2006 (TRHCA) extended the therapy cap exceptions process through December 31, 2007 and provided funds used for two CMS projects related to developing alternative payment approaches for therapy services that are based on beneficiary needs. A 5-year project titled “Development of Outpatient Therapy Alternatives” (DOTPA), awarded to RTI International, was initiated in order to develop a comprehensive and uniform therapy-related data collection instrument, assess its feasibility, and determine the subset of the measures that we could routinely and reliably collect in support of payment alternatives. While DOTPA will identify measurement items relevant to payment, the project will not deliver a standardized measurement tool. We may either develop a tool or allow other tools to be used for payment purposes when they include those items that identify the following: (a) Beneficiary need; and (b) outcomes (that is effectiveness of therapy services). In addition to therapy caps, the DOTPA project addresses our interest in value-based purchasing by identifying components of value, including beneficiary need and the effectiveness of therapy services.

The DOTPA project reports are available on the contractor's Web site at http://optherapy.rti.org/. The data collection design and instrument development have been completed, and a Paperwork Reduction Act (PRA) package was submitted for approval of the data collection forms by the Office of Management and Budget (OMB). The Federal Register notice for the second round of public comment on this package was published on April 23, 2010 (75 FR 21296). Once the PRA package is approved, the contractor will begin data collection. While approval is pending, the contractor is recruiting potential participants in the data collection, developing training materials for participants, and updating the project web site. We are not seeking public comments on the DOTPA project in this proposed rule.

The TRCHA also funded the 2-year project contracted to Computer Sciences Corporation (CSC) titled “Short Term Alternatives for Therapy Services” (STATS). STATS will provide recommendations regarding alternative payment approaches to therapy caps that could be considered before completion of the DOTPA project. The STATS project draws upon the analytical and clinical expertise of contractors and stakeholders to consider policies, measurement tools, and claims data that are currently available to provide further information about patient condition and the outcomes of therapy services. The final report, due in the fall of CY 2010, will include recommended actions we could take within 2 or 3 calendar years to replace the current cap limits on therapy services with a policy that pays appropriately for necessary therapy services.

c. Potential Short-Term Approaches to Therapy Caps

On June 30, 2009, we received a draft of the CSC report titled “STATS Outpatient Therapy Practice Guidelines,” a summary of expert workgroup discussions, and several short-term payment alternatives for consideration. CSC discussed options based on the assumption that short-term policy changes should facilitate the development of adequate function and/or outcomes reporting tools. In the long-term, CSC recommended that payment be based on function or quality measurements that adequately perform risk adjustment for episode-based payment purposes.

Based on the draft report, additional stakeholder input, and subsequent communications with the contractor, in this proposed rule we are discussing several potential alternatives to the therapy caps that could lead to more appropriate payment for medically necessary and effective therapy services that are furnished efficiently. We are soliciting public comments on this proposed rule regarding all aspects of these alternatives, including the potential associated benefits or problems, clinical concerns, practitioner administrative burden, consistency with other Medicare and private payer payment policies, and claims processing considerations. We are not proposing either short-term or long-term payment alternatives to the therapy caps at this time. However, we refer readers to section II.C.4.(c) of this proposed rule for our CY 2011 proposal to expand the MPPR policy to “always therapy” services furnished in a single session in order to pay more appropriately for therapy services, taking into consideration the expected efficiencies when services are furnished together. While we are not proposing the adoption of an MPPR policy for therapy services specifically as an alternative to the therapy caps, we acknowledge that by paying more appropriately for combinations of therapy services that are commonly furnished in a single session, practitioners would be able to furnish more medically necessary therapy services to a given beneficiary before surpassing the caps. This proposed policy would have the potential to reduce the number of beneficiaries impacted by the therapy caps in a given year.

The three specific short-term options that we are discussing in this proposed rule would not require statutory changes. Some would require moderate reporting changes that would yield more detailed information about patient function and progress to inform future payment approaches and facilitate the medical review of services above the therapy caps at the present time. Others require new coding and bundled per-session payment that would be a first step toward episode-based payment. They are not necessarily independent of each other. Under each of these alternatives, administrative simplification with respect to current policies, such as HCPCS code edits and “ICD-9-CM to HCPCS code” crosswalk edits that serve to limit utilization without regard to the patient's clinical presentation, could be pursued in the context of these options.

The first option would modify the current therapy caps exceptions process to capture additional clinical information regarding therapy patient severity and complexity in order to facilitate medical review. This approach would complement the DOTPA project, which is identifying items to measure patient condition and outcomes. We believe the first option may have the greatest potential for rapid implementation that could yield useful information in the short-term. We are especially interested in detailed public comments on this option that could inform a potential proposal to adopt such an alternative through future rulemaking. The second option would involve introducing additional claims edits regarding medical necessity, in order to reduce overutilization. The third option would be to adopt a per-session bundled payment that would vary based on patient characteristics and the complexity of evaluation and treatment services furnished in the session. Each option would require significant provider and contractor education, and all would necessitate major claims processing systems changes. Moreover, some of the options may affect beneficiaries by changing the type or amount of services covered by Medicare or the beneficiary's cost sharing obligations.

Option (1): Revise therapy caps exceptions process by requiring the reporting of new patient function-related Level II HCPCS codes and severity modifiers.

This option would require that clinicians submit beneficiary function-related nonpayable HCPCS codes to replace the -KX modifier (Specific required documentation on file). Codes would not be submitted on every claim, but at episode onset and at periodic intervals (for example, progress report intervals of 12 sessions or 30 days—whichever is less). Codes would be submitted for all patients in order for the claims to be paid and not only those claims approaching or surpassing the therapy caps. The current -KX modifier is not useful to identify claims exceeding therapy caps, because it is used for services both before and after the caps are exceeded, and it must be used on the entire claim for facilities. New codes also would not identify claims above the cap, but they would perform the same function as the current -KX modifier to signal that documentation in the medical record supported medical necessity that should lead to an exception to the therapy caps. The codes would also provide more information for medical review.

Six Level II HCPCS G-codes representing functions addressed in the plan of care and 5 (or 7) modifiers representing severity/complexity would be utilized to report information on the claim.

Examples of six new function-related G-codes:

  • GXXXU—Impairments to body functions and/or structures—current.
  • GXXXV—Impairments to body functions and/or structures—goal.
  • GXXXW—Activity limitations and/or participation restrictions—current.
  • GXXXX—Activity limitations and/or participation restrictions—goal.
  • GXXXY—Environmental barriers—current.
  • GXXXZ—Environmental barriers—goal.

Two potential severity/complexity scales have been suggested that would require the adoption of 5 or 7 new severity modifiers, respectively. Under one scenario, modifiers based on the International Classification of Function could identify severity as follows:

  • None (0 to 4 percent);
  • MILD (5 to 24 percent);
  • MODERATE (25 to 49 percent);
  • SEVERE (50 to 95 percent); or
  • COMPLETE (96 to 100 percent).

Alternatively, a proportional severity/complexity scale would use 7 modifiers to describe impairments, limitations, or barriers:

  • 0 percent;
  • 1 to 19 percent;
  • 20 to 39 percent;
  • 40 to 59 percent;
  • 50 to 79 percent;
  • 80 to 99 percent; or
  • 100 percent.

Implementation of this general approach would require 6 months to 2 years to modify claims processing for the current therapy caps and exceptions processing of claims, and to develop, pilot test, and refine coding before applying the approach nationally. While therapists initially would need to learn the new codes and update their billing systems, ultimately their reporting burden would be reduced because the -KX modifier would not be required on each claim line for patients with expenditures approaching or exceeding the therapy caps. This option could potentially result in a small reduction in outpatient therapy expenditures due to increased Medicare contractor scrutiny of episodes where functional severity scores did not change over time, or to other atypical reporting patterns associated with the new codes.

In the long-term, these codes and modifiers could be mapped to reliable and validated measurement tools (either currently available tools in the public domain or newly developed tools from items on the DOTPA instrument or the Continuity Assessment Record and Evaluation (CARE) tool). When statistically robust patient condition information has been collected from claims data, it may be possible to develop Medicare payment approaches for outpatient therapy services that would pay appropriately and similarly for efficient and effective services furnished to beneficiaries with similar conditions who have good potential to benefit from the services furnished. At a minimum, the new codes would allow contractors to more easily identify and limit the claims for beneficiaries that show no improvement over reasonable periods of time.

Option (2): Enhance existing therapy caps exceptions process by applying medical necessity edits when per-beneficiary expenditures reach a predetermined value.

The existing automatic process for exceptions, and the revised exceptions process described in Option 1 above, pay practitioners indefinitely for services if they attest on the claim by appending a specific modifier to therapy HCPCS codes that the services being furnished are medically necessary and that supporting documentation is included in the medical record. Unless the contractor uses claims edits or does post payment review, these processes do not identify or limit unusually high annual per-beneficiary utilization. High utilization is not limited to beneficiaries with multiple or complex conditions. We could use existing therapy utilization data to develop annual per-beneficiary medical necessity payment edits, such as limits to the number of services per session, per episode, or per diagnostic grouping, for exceptions to the therapy caps which could be set at benchmark payment levels that only a small percentage of beneficiaries would surpass in a single year. Once these levels were reached, additional claims would be denied and practitioners would need to appeal those denials if they wished to challenge Medicare's nonpayment.

This alternative would require 1 to 2 years to implement as an expansion of existing policy, and its effects could be anticipated by analysis of the current utilization of therapy services. Additional practitioner burden would be incurred in the small number of cases exceeding the per-beneficiary expenditure edits when the practitioner chooses to appeal the medical necessity denial.

Option (3): Introduce per-session “Evaluation/Assessment and Intervention” (E&I) codes to bundle payment for groups of current therapy HCPCS codes into a single per-session payment.

As discussed in section II.C.4.(c) of this proposed rule, multiple therapy services are often furnished in a single session, and we are proposing to expand the MPPR policy to “always therapy” services in CY 2011 in order to take into consideration the efficiencies that occur when multiple services (the typical therapy scenario) are furnished in one session to a beneficiary. Furthermore, we note that section 1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) regarding potentially misvalued codes under the PFS specifies that the Secretary may make appropriate coding changes, which may include consolidation of individual services into bundled codes for payment under the PFS, as part of her review and adjustment of the relative values for services identified as potentially misvalued.

This option would require that practitioners submit a single new Level II HCPCS code to represent all the therapy services currently reported and paid separately for an outpatient therapy session. Payment for the HCPCS code would be based on patient characteristics (as identified through prior CMS contractor analyses) and the complexity of the evaluation/assessment and intervention services furnished during the session. The new coding requirements would not disrupt the current exceptions process or the revised exceptions process described in Option (1) above. Approximately 12 E&I codes would be needed, taking into consideration the basic algorithm shown in Table 31.

Table 31—Evaluation/Assessment & Intervention Level II HCPCS Codes Back to Top
Evaluation/Assessment complexity
Minimal Moderate Significant
Intervention Level:      
None E&I Code #1 E&I Code #2 E&I Code #3.
Minimal E&I Code #4 E&I Code #5 E&I Code #6.
Moderate E&I Code #7 E&I Code #8 E&I Code #9.
Significant E&I Code #10 E&I Code #11 E&I Code #12.

We would need to develop and test operational definitions for each E&I code so that practitioners would be able to properly report services and appropriate relative values could be established for each per-session code. We believe that a pilot study might reveal that the different practice patterns for the three therapy professions (physical therapy, occupational therapy, and speech-language pathology) could necessitate separate relative value determinations for each E&I code by type of therapy service furnished. As a result, up to 36 total new Level II HCPCS codes could be needed (12 per discipline).

We anticipate that the definitions of E&I codes 1 through 3 and 7 through 12 would describe services that may only be furnished by a “clinician” (therapist, physician, or nonphysician practitioner). E&I codes 1 through 3 would be reported for sessions that consisted only of evaluations. In addition, the definitions of E&I codes 4 through 6 would describe services that could be furnished by or under the permissible supervision of all qualified outpatient therapy professionals. Based upon historical therapy utilization patterns, the vast majority of E&I codes submitted would likely fall in the 4 through 9 code range. We would expect the RVUs under the PFS for all E&I codes to take into consideration the efficiencies when multiple services (those that would be currently reported under multiple CPT codes) are furnished.

This option would require 2 to 4 years to add new codes and conduct a short-term pilot study to refine coding and value the 12 new HCPCS codes (or 36 if they are specific to each therapy discipline). There would be significant initial practitioner administrative burden to learn new codes and update billing systems. However, ultimately, with elimination of the practitioner's reporting of 76 different codes and many of the associated claims processing edits, the administrative burden of reporting therapy services to Medicare would be minimized. This bundled approach to reporting and payment could result in more appropriate valuation of therapy services that reflects efficiencies when individually reported services are furnished in the same session. As a result, it could lead to reduced therapy expenditures, as well as a reduction in the number of beneficiaries affected by the therapy caps in a given year.

In conclusion, we emphasize that we continue to be committed to developing alternatives to the therapy caps that would provide appropriate payment for medically necessary and effective therapy services furnished to Medicare beneficiaries based on patient needs, rather than the current therapy caps which establish financial limitations on Medicare payment for therapy services in some settings regardless of medical necessity. The Congress has repeatedly intervened to allow exceptions to these caps for certain time periods, and the current exceptions are automatically processed based on a practitioner's attestation that medical necessity is documented in the chart for an individual patient. We believe that, ultimately, payment for therapy services should incentivize the most effective and efficient care, consistent with Medicare's focus on value in its purchasing.

Therefore, we are soliciting public comments on potential alternatives to the therapy caps, including those discussed in this section of this proposed rule. The STATS contractor has worked closely with a broad variety of clinicians, administrators, scientists, researchers, and other contractors to develop the 3 alternatives presented this discussion. We welcome all public comments on this propose rule from interested stakeholders, including individual therapists from both facility and nonfacility settings treating Part B (outpatient) beneficiaries. Among the topics of interest to us are the following:

  • Recommendations for alternative payment policies (options discussed in this proposed rule or others) that address patient needs, while minimizing payment for inefficient services or those of limited patient benefit;
  • Assessment of the practitioner burden associated with the recommended policies;
  • Likelihood that recommended changes would minimize fraud, abuse, and waste;
  • Whether the recommendations could assist CMS in obtaining meaningful information on patient function and how that information could be utilized;
  • Whether measurement tools relevant to assessing the need for therapy services exist in the public domain and how they might be utilized;
  • What function information should be collected and how it could be utilized to ensure necessary care, while minimizing payment for inefficient services or those of limited patient benefit; and
  • How therapist behavior, plans of care, or patient scheduling would be affected by the recommended alternatives.

We are committed to finding alternatives to the current therapy cap limitations on expenditures for outpatient therapy services that will ensure that beneficiaries continue to receive those medically necessary therapy services that maximize their health outcomes. We continue to dedicate our resources to identifying alternatives that would encourage the most efficient and cost-effective treatments. We believe motivated therapists, with attention to the most cost-effective practices, can incorporate practice efficiencies that benefit patients by achieving the best possible results at the lowest cost.

Our STATS and DOTPA projects, which are currently engaged in data collection and analysis to inform short-term and long-term alternatives to the therapy caps, respectively, lay the foundation for future payment alternatives for outpatient therapy services. We are optimistic that the STATS project will identify short-term, feasible alternatives that may be tested in the future. The DOTPA project will create a tool and test its use to collect patient condition information that can then be applied to identify patient need for therapy services. Together, these projects may provide the basis for a long-term plan to reshape Medicare's payment policy for outpatient therapy services to align with the value-based purchasing principles that are now guiding principles of the Medicare program. We encourage the public to provide comments so that we may consider all perspectives as we continue our work in this important area.

B. Diabetes Self-Management Training (DSMT) Services (HCPCS Codes G0108 and G0109)

1. Background

Section 4105(a) of BBA provided coverage for DSMT in outpatient settings without limiting this coverage to hospital outpatient departments. DSMT services consist of educational and training services furnished to an individual with diabetes by a certified provider in an outpatient setting.

Section 4105(a) of the BBA stipulated that training would be furnished by a “certified provider” which is a physician or other individual or entity that also provides other items or services for which payment may be made under Medicare. This program is intended to educate beneficiaries in the successful self-management of diabetes. The program includes instructions in self-monitoring of blood glucose; education about diet and exercise; an insulin treatment plan developed specifically for the patient who is insulin-dependent; and motivation for patients to use the skills for self-management. DSMT services are reported under HCPCS codes G0108 (Diabetes outpatient self-management training services, individual, per 30 minutes) and G0109 (Diabetes outpatient self-management training services, group session (2 or more), per 30 minutes).

2. Proposed Payment for DSMT Services

In accordance with section 4105(a) of the BBA, Medicare payment for outpatient DSMT services is made under the PFS as specified in § 414.1 through § 414.48. When we created HCPCS codes G0108 and G0109, the only direct costs included in the PE were registered nurse labor. Section 410.144(a)(4)(a) states that the DSMT team includes at least a registered dietitian and a certified diabetes educator. We did not establish work RVUs for DSMT services because we believed training would typically be performed by individuals other than a physician, such as a registered nurse (65 FR 83130). However, since that time, we have received requests from a number of stakeholders, including the American Association of Clinical Endocrinologists (AACE), the American Association of Diabetes Educators (AADE), and the Juvenile Diabetes Research Foundation, to include physician work in valuing DSMT services that is similar to the physician work that has been included in medical nutrition therapy (MNT) services since CY 2007 and kidney disease education (KDE) services since CY 2010. The stakeholders argued that because physicians coordinate DSMT programs, provide patient instruction, and communicate with referring physicians, physician work should be included in the RVUs for DSMT services. The stakeholders also requested that we reconsider the direct PE inputs for DMST services and include clinical labor for diabetes educators at a higher hourly rate instead of registered nurse labor. In addition, they stated that the supplies and equipment in the PE for DSMT services should be the same as for KDE services, with additional direct PE inputs for a diabetic educator curriculum, data tracking software, and DSMT program accreditation.

For CY 2011, we are proposing to assign physician work RVUs to DSMT services that are comparable, as adjusted for the service times of the HCPCS codes, to the work RVUs for MNT services. We are proposing that HCPCS G0108 for 30 minutes of individual DSMT services would be crosswalked to CPT code 97803 (Medical nutrition therapy; re-assessment and intervention, individual, face-to-face with the patient, each 15 minutes) for purposes of assigning work RVUs, with the physician work RVUs for CPT code 97803 multiplied by two to account for the greater time associated with HCPCS code G0108 (that is, 30 minutes). We are also proposing that HCPCS G0109 for 30 minutes of group DSMT services would be crosswalked to CPT code 97804 (Medical nutrition therapy; group (2 or more individuals(s)), each 30 minutes) for purposes of assigning work RVUs. The rationale for the proposed work RVUs for the DSMT HCPCS G-codes is based on the similarity of DSMT services to MNT services in the individual (CPT code 97803) and group (CPT code 97804) setting.

For CY 2011, we are also proposing to modify the PE inputs for DSMT services to reflect the current equipment and supplies for the KDE HCPCS G-codes implemented in the CY 2010 PFS final rule with comment period (74 FR 61901) (that is, HCPCS codes G0420 (Face-to-face educational services related to the care of chronic kidney disease; individual, per session, per one hour) and G0421 (Face-to-face educational services related to the care of chronic kidney disease; group, per session, per one hour)), based on the similarity in the equipment and supplies necessary for DSMT and KDE services. We have made adjustments to some of the equipment times for the 30 minute DSMT individual and group services as compared to the 1 hour individual and group KDE services. We are also including a diabetic educator curriculum and data tracking software in the PE inputs for DSMT services, but it is our general practice not to include program accreditation costs in those PE inputs. With respect to clinical labor, rather than changing the current labor type for DSMT services, we are proposing to utilize the same approach as we adopted for MNT services when we provided physician work RVUs for those services in CY 2007 (71 FR 69645). Specifically, we are removing all of the clinical labor from the group DSMT code and most of the clinical labor from the individual DSMT code, given that we are proposing work RVUs for both DSMT codes for CY 2011.

We believe these proposals would value DSMT services more consistently with other similar services that are paid under the PFS. As a result of our proposed CY 2011 changes, the proposed work RVUs for HCPCS codes G0108 and G0109 are 0.90 and 0.25, respectively. As described above, we are also proposing to modify the direct PE inputs for these codes for CY 2011.

C. End-Stage Renal Disease Related Services for Home Dialysis (CPT Codes 90963, 90964, 90965, and 90966)

1. End-Stage Renal Disease Home Dialysis Monthly Capitation Payment Services (CPT Codes 90963, 90964, 90965, and 90966)

In the CY 2004 PFS final rule with comment period (68 FR 63216), we established new Level II HCPCS G-codes for end-stage renal disease (ESRD) monthly capitation payment (MCP) services. For center-based patients, payment for the G-codes varied based on the age of the beneficiary and the number of face-to-face visits furnished each month (for example, 1 visit, 2-3 visits and 4 or more visits). Under the MCP methodology, the lowest payment applied when a physician provided one visit per month; a higher payment was provided for two to three visits per month. To receive the highest payment, a physician would have to provide at least four ESRD-related visits per month. However, payment for home dialysis MCP services only varied by the age of beneficiary. Although we did not initially specify a frequency of required visits for home dialysis MCP services, we stated that we “expect physicians to provide clinically appropriate care to manage the home dialysis patient” (68 FR 63219).

Effective January 1, 2009, the CPT Editorial Panel created new CPT codes to replace the G-codes for monthly ESRD-related services, and we accepted the new codes for use under the PFS in CY 2009. The CPT codes for monthly ESRD-related services for home dialysis patients include the following, as displayed in Table 32: 90963, 90964, 90965, and 90966. In addition, the clinical vignettes used for the valuation of CPT codes 90963, 90964, 90965, and 90966 include scheduled (and unscheduled) examinations of the ESRD patient.

Given that we pay for a physician (or practitioner) to evaluate the ESRD patient over the course of an entire month under the MCP, we believe that it is clinically appropriate for the physician (or practitioner) to have at least one in-person, face-to-face encounter with the patient per month. Therefore, we are proposing to require the MCP physician (or practitioner) to furnish at least one in-person patient visit per month for home dialysis MCP services (as described by CPT codes 90963 through 90966). This requirement would be effective for home dialysis MCP services beginning January 1, 2011. We believe this requirement reflects appropriate, high quality medical care for ESRD patients being dialyzed at home and generally would be consistent with the current standards of medical practice.

2. Daily and Monthly ESRD-Related Services (CPT Codes 90951 through 90970)

In CY 2008, the AMA RUC submitted recommendations for valuing the new CY 2009 CPT codes displayed in Table 32 that replaced the MCP HCPCS G-codes for monthly ESRD-related services. We accepted these codes for use under the PFS.

Table 32—MCP Codes Recognized Under the PFS Back to Top
MCP code Long descriptor
90951 End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month.
90952 End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2-3 face-to-face physician visits per month.
90953 End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
90954 End-stage renal disease (ESRD) related services monthly, for patients 2-11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month.
90955 End-stage renal disease (ESRD) related services monthly, for patients 2-11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2-3 face-to-face physician visits per month.
90956 End-stage renal disease (ESRD) related services monthly, for patients 2-11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
90957 End-stage renal disease (ESRD) related services monthly, for patients 12-19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month.
90958 End-stage renal disease (ESRD) related services monthly, for patients 12-19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2-3 face-to-face physician visits per month.
90959 End-stage renal disease (ESRD) related services monthly, for patients 12-19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
90960 End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 4 or more face-to-face physician visits per month.
90961 End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 2-3 face-to-face physician visits per month.
90962 End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 1 face-to-face physician visit per month.
90963 End-stage renal disease (ESRD) related services for home dialysis per full month, for patients younger than 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents.
90964 End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 2-11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents.
90965 End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 12-19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents.
90966 End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 20 years of age and older.

There are four additional CPT codes for ESRD-related services that are reported on a per-day basis. These daily CPT codes are: 90967 (End-stage renal disease (ESRD) related services for dialysis less than a full month of service, per day; for patients younger than 2 years of age); 90968 (End-stage renal disease (ESRD) related services for dialysis less than a full month of service, per day; for patients 2-11 years of age); 90969 (End-stage renal disease (ESRD) related services for dialysis less than a full month of service, per day; for patients 12-19 years of age); and 90970 (End-stage renal disease (ESRD) related services for dialysis less than a full month of service, per day; for patients 20 years of age and older).

For the MCP codes displayed in Table 32, the AMA RUC initially recommended 36 minutes of clinical labor time for the pre-service period. They also recommended an additional 6 minutes in the post-period for CPT codes 90960, 90961, 90962, and 90966. For the four codes describing daily services (CPT codes 90967 through 90970), the AMA RUC recommended including 1.2 minutes of clinical labor per day, which is the prorated amount of pre-service clinical labor included in the monthly codes. The AMA RUC also recommended that CPT codes 90952 and 90953 be contractor-priced.

In the CY 2009 PFS final rule with comment period (73 FR 69898), we asked the AMA RUC to reconsider their recommended PE inputs in the interest of making certain that they accurately reflected the typical direct PE resources required for these services. In addition, we asked the AMA RUC to review the physician times for CPT codes 90960 and 90961 that are used in the calculation of the PE RVUs. We accepted the work values for the new CPT codes for ESRD-related services that were recommended by the AMA RUC.

Since CY 2009, we have continued to calculate the PE RVUs for the entire series of MCP codes displayed in Table 32 by using the direct PE inputs from the predecessor HCPCS G-codes, except for CPT codes 90952 and 90953 which are contractor-priced. We have also continued to use the physician time associated with the predecessor HCPCS G-codes for CPT codes 90960 and 90961 for purposes of calculating the PE RVUs.

In CY 2009, the AMA RUC submitted new recommendations for CPT codes 90951 and 90954 through 90970. For each of the MCP codes (CPT code 90951 and CPT codes 90954 through 90966), the AMA RUC recommended an increased pre-service clinical staff time of 60 minutes. For each of the daily dialysis service codes (CPT codes 90967 through 90970), the AMA RUC recommended an increased clinical labor time of two minutes, which is the prorated amount of clinical labor included in the monthly codes. The AMA RUC also recommended an additional 38 minutes of physician time for CPT codes 90960 and 90961. This resulted in a total physician time of 128 minutes and 113 minutes, respectively, for these codes. The AMA RUC continued to recommend that CPT codes 90952 and 90953 be contractor-priced.

For CY 2011, we are proposing to accept these AMA RUC recommendations as more accurate reflections of the typical direct PE resources required for these services. Therefore, we are proposing to develop the PE RVUs for CPT code 90951 and CPT codes 90954 through 90970 using the direct PE inputs as recommended by the AMA RUC and reflected in the proposed CY 2011 PE database, which is available on the CMS Web site under the supporting data files for the CY 2011 PFS proposed rule at: http://www.cms.gov/PhysicianFeeSched/. We are also proposing to use the AMA RUC-recommended physician times for CPT codes 90960 and 90961. Consistent with the AMA RUC's recommendations, we are proposing to continue to contractor-price CPT codes 90952 and 90953.

D. Portable X-Ray Set-Up (HCPCS Code Q0092)

When a portable x-ray is furnished to a single patient, as many as four component HCPCS codes may be billed and paid for the service, including the portable x-ray transportation (HCPCS code R0070 (Transportation of portable x-ray equipment and personnel to home or nursing home, per trip to facility or location, one patient seen)); the portable x-ray set-up (HCPCS code Q0092 (Set-up of portable x-ray equipment)); and the professional and technical components of the x-ray service itself (CPT 70000 series). Currently, the direct PE database contains x-ray equipment in both the radiology codes in the 70000 series of CPT and HCPCS code Q0092, the code for the set-up of a portable x-ray. In the technical component of the x-ray service is the direct PE input of a radiology room which contains x-ray equipment for the various radiology codes in the 70000 series of CPT. In addition, portable x-ray equipment is included as a direct PE input for HCPCS code Q0092. Thus, x-ray equipment currently is recognized within the direct PE values for two of the HCPCS codes that would be reported for the portable x-ray service, resulting in an overvaluation of the comprehensive portable x-ray service.

Therefore, for CY 2011 we are proposing to remove portable x-ray equipment as a direct PE input for HCPCS code Q0092, in order to pay more appropriately for the x-ray equipment used to furnish a portable x-ray service. We believe the resulting payment for the comprehensive portable x-ray service would more appropriately reflect the resources used to furnish portable x-ray services by providing payment for the x-ray equipment solely through payment for the technical component of the x-ray service that is furnished.

E. Pulmonary Rehabilitation Services (HCPCS Code G0424)

In the CY 2010 PFS proposed rule (74 FR 33614), we proposed to create new HCPCS G-code G0424 (Pulmonary rehabilitation, including aerobic exercise (includes monitoring), per session, per day) to describe the services of a pulmonary rehabilitation (PR) program as specified in section 144(a) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). Using CPT code 93797 (Cardiac rehab without telemetry) as a reference code, we proposed to assign 0.18 work RVUs and 0.01 malpractice RVUs to G0424. To establish PE RVUs, we reviewed the PE inputs of similar services, particularly those of the respiratory therapy HCPCS codes G0237 (Therapeutic procedures to increase strength or endurance or respiratory muscles, face to face, one on one, each 15 minutes (includes monitoring)) and G0238 (Therapeutic procedures to improve respiratory function, other than described by G0237, one on one, face to face, per 15 minutes (includes monitoring)), as well as the cardiac rehabilitation codes, CPT codes 93797 and 93798 (Physician services for outpatient cardiac rehabilitation; with continuous ECG monitoring (per session)). In the CY 2010 PFS final rule with comment period (74 FR 61886), we finalized our proposal with modifications to the code descriptor and PE inputs, as recommended by some commenters.

Based on commenters' recommendations from the CY 2010 PFS final rule with comment period and further information furnished by stakeholders, we are proposing to increase the work RVUs for HCPCS code G0424 to 0.28 for CY 2011 to be comparable to the work RVUs for cardiac rehabilitation with monitoring (CPT code 93798) in view of the monitoring required for HCPCS code G0424.

In addition, we are also proposing to increase the clinical labor time for the respiratory therapist from 15 minutes to 30 minutes and to crosswalk the PE equipment inputs for HCPCS code G0424 to those for respiratory treatment services (HCPCS code G0238), which include a 1-channel ECG and a pulse oximeter. We would retain the treadmill currently assigned to HCPCS code G0424 and adjust the equipment time to 45 minutes. While several public commenters recommended this equipment, these commenters also requested a full 60 minutes of respiratory therapist time be included in the PE for HCPCS code G0424, comparable to the 15 minutes of respiratory therapist time included in the one-on-one codes for 15 minutes of respiratory treatment services (HCPCS codes G0237 and G0238). However, because PR services reported under HCPCS code G0424 can be furnished either individually or in groups, we believe that 30 minutes of respiratory therapist time would be more appropriate for valuing the typical PR service.

F. Application of Tissue-Cultured Skin Substitutes to Lower Extremities (HCPCS Codes GXXX1 and GXXX2)

There are currently two biological products, Apligraf and Dermagraft, which are FDA-approved for the treatment of diabetic foot ulcers. While commonly used by podiatrists for this purpose, these products are also used by other specialists in the treatment of other clinical conditions, such as burns.

Many Medicare contractors have established local coverage determinations specifying the circumstances under which these services are covered. In the case of diabetic foot ulcers, clinical studies of Apligraf weekly application were based on up to 5 treatments over a 12-week period. In contrast, Dermagraft was applied weekly, up to 8 treatments over a 12-week period.

The skin substitute CPT codes were reviewed and new codes were last created by the CPT Editorial Panel for CY 2006. There are currently 2 skin repair CPT codes that describe Apligraf application, one primary code, CPT code 15340 (Tissue cultured allogeneic skin substitute; first 25 sq cm or less) and one add-on code, CPT code 15341 (Tissue cultured allogeneic skin substitute; each additional 25 sq cm, or part thereof (List separately in addition to code for primary procedure)) and 4 codes that describe Dermagraft application, two initial codes based on body area, CPT codes 15360 (Tissue cultured allogeneic dermal substitute, trunk, arms, legs; first 100 sq cm or less, or 1 percent of body area of infants and children) and 15365 (Tissue cultured allogeneic dermal substitute, face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits; first 100 sq cm or less, or 1 percent of body area of infants and children) and two add-on codes, CPT codes 15361 (Tissue cultured allogeneic dermal substitute, trunk, arms, legs; each additional 100 sq cm, or each additional 1 percent of body area of infants and children, or part thereof (List separately in addition to code for primary procedure)) and 15366 (Tissue cultured allogeneic dermal substitute, face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits; each additional 100 sq cm, or each additional 1 percent of body area of infants and children, or part thereof (List separately in addition to code for primary procedure)).

Several stakeholders have expressed concern about the appropriateness and equity of the coding and payment for these services, given their similar uses and the office resources required when the products are applied repeatedly over a number of weeks for treatment of lower extremity ulcers. They are concerned that current coding, with the associated payment policies and relative values, does not provide for appropriate payment for the services based on how they are furnished. In addition, some stakeholders believe that the current coding and payment provides a financial incentive for the selection of one tissue-cultured product over another, rather than facilitating clinical decisionmaking based solely on the most clinically appropriate product for the patient's case. For example, the Dermagraft and Apligraf application codes have 90-day and 10-day global periods, respectively, and their current values include several follow-up office visits. When patients are treated periodically with repeated applications of the products over several weeks, the patients may be seen in follow-up by the physician. However, those encounters would not be evaluation and management visits but, instead, would be procedural encounters that would typically be valued differently under the PFS than the follow-up office visits currently included in the values for the Dermagraft and Apligraf application codes. Furthermore, while different stakeholders have indicated that debridement and site preparation are variably performed when these products are applied, the CPT codes for Dermagraft application allow separate reporting of these preparation services when they are performed, while the Apligraf application codes bundle these services. Since CY 2006, the PFS has accepted the RUC work and PE recommendations for the Dermagraft and Apligraf application codes and has paid accordingly.

With respect to Medicare payment policy, some Medicare contractors allow the use of modifier -58 (Staged or related procedure or service by the same physician during the postoperative period) to be reported with the skin substitute application codes and provide full payment for the service each time it is performed, even if the subsequent application(s) is within the global period of the service. Other contractors do not allow the use of modifier -58, and therefore, provide a single payment for a series of applications over 90 days or 10 days, as applicable to the particular code reported for the product's initial application.

Because of the current inconsistencies in valuing similar skin substitute application services and the common clinical scenarios for their use for Medicare beneficiaries, we believe that it would be appropriate to temporarily create Level II HCPCS G-codes to report application of tissue-cultured skin substitutes applied to the lower extremities in order to provide appropriate and consistent payment for the services as they are commonly furnished. Therefore, we are proposing to create two new HCPCS G-codes for CY 2011, GXXX1 (Application of tissue cultured allogeneic skin substitute or dermal substitute; for use on lower limb, includes the site preparation and debridement if performed; first 25 sq cm or less) and GXXX2 (Application of tissue cultured allogeneic skin or dermal substitute; for use on lower limb, includes the site preparation and debridement if performed; each additional 25 sq cm), that would be recognized for payment under the PFS for the application of Apligraf or Dermagraft to the lower limb. These codes would not allow separate reporting of CPT codes for site preparation or debridement. We emphasize that we would expect that the use of these HCPCS G-codes for payment under Medicare would be temporary, while stakeholders work through the usual channels to establish appropriate coding for these services that reflects the current common clinical scenarios in which the skin substitutes are applied. Furthermore, we would expect to receive recommendations from the AMA RUC for appropriate work values and direct practice expense inputs for the applicable codes, according to the usual process for new or revised codes.

Under the PFS, as a temporary measure, the HCPCS G-codes would be assigned a 0-day global period so payment would be made each a time a covered service was furnished. We are proposing to base payment on the physician work relative values and the direct PE inputs for the existing CPT codes for Apligraf application, with adjustments for the global period differences because the HCPCS G-codes and the Apligraf application CPT codes. These CPT codes resemble the new HCPCS G-codes in terms of wound size description and the inclusion of site preparation and debridement in their current values so we believe they appropriately represent the physician work involved in the proposed HPCPCS G-codes. However, we would adjust the work RVUs of the Apligraf application codes to derive the HCPCS G-code proposed CY 2011 work values by extracting the values for any office visits and discharge day management services because the HCPCS G-codes have a 0-day global period. In addition, we would adjust the direct PE inputs of the Apligraf application codes to develop the proposed CY 2011 direct PE inputs of the HPCPS G-codes that have a 0-day global period.

Our crosswalks and adjustments result in proposed CY 2011 work RVUs of 2.22 for HPCPCS code GXXX1 and 0.50 for HCPCPS GXXX2. The proposed direct PE inputs for HCPCS codes GXXX1 and GXXX2 are included in the direct PE database for the CY 2011 proposed rule that is posted on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp.

We note that many Medicare contractors currently have local coverage policies that specify the circumstances under which Medicare covers the application of skin substitutes. The local coverage policies may include diagnostic or prior treatment requirements, as well as frequency limitations on the number and periodicity of treatments. We expect that these policies would be updated in the context of the temporary new HCPCS G-codes that we are proposing for use in CY 2011 to report the application of tissue cultured allogeneic skin or dermal substitutes. We are proposing to establish the HCPCS G-codes for temporary use in CY 2011 in order to improve the consistency and resource-based nature of PFS payments for skin substitute application services that require similar resources. However, we note our continued interest in ensuring that skin substitutes are properly utilized for Medicare beneficiaries who will benefit from that treatment. We will continue to monitor the utilization of these services and plan to identify any concerning trends in utilization that contractors may want to examine further through medical review or other approaches.

G. Canalith Repositioning (CPT Code 95992)

For CY 2009, CPT created a new code for canalith repositioning, specifically CPT code 95992 (Canalith repositioning procedure(s) (e.g., Epley maneuver, Semont maneuver), per day). This service may be furnished by both physicians and therapists. Although we accepted the RUC-recommended work RVUs and PE inputs, we initially bundled this procedure on an interim basis in the CY 2009 PFS final rule with comment period (73 FR 69896), indicating that we believed it would be paid through the E/M service that it would accompany. Subsequently, in view of concerns from therapists who cannot furnish E/M services, we clarified that therapists could report one of the generally defined therapy CPT codes when canalith repositioning was furnished. In the CY 2010 PFS final rule with comment period (74 FR 61766), we changed the code's status under the PFS to “not recognized for payment under Medicare,” consistent with our expectation that another payable code would be reported when the service was furnished.

Based on further information from stakeholders regarding the distinct and separate nature of this procedure from an E/M service and their request that we recognize this CPT code for payment, similar to our separate payment for most other procedures commonly furnished in association with an E/M service, we are proposing to recognize CPT code 95992 for payment under the CY 2011 PFS, consistent with our typical treatment of most other codes for minor procedures. In doing so, we are proposing to change the code's status to “A” and utilize the CY 2009 RUC recommendations for work RVUs (0.75) and PE inputs for establishing its payment in CY 2011. (That is, status “A” means Active code. These codes are separately payable under the PFS if covered.) Because canalith repositioning (CPT code 95992) can be furnished by physicians or therapists as therapy services under a therapy plan of care or by physicians as physicians' services outside of a therapy plan of care, we would add CPT code 95992 to the “sometimes therapy” list on the therapy code abstract file.

H. Intranasal/Oral Immunization Codes (CPT Codes 90467, 90468, 90473, and 90474)

To ensure that the PE RVUs are consistent between the intranasal/oral and injectable immunization administration CPT codes that describe services that utilize similar PE resources, we are proposing to crosswalk the PE values for CPT code 90471 (Immunization administration (includes percutaneous, intradermal, subcutaneous, or intramuscular injections); one vaccine (single or combination vaccine/toxoid)) to CPT codes 90467 (Immunization administration younger than age 8 years (includes intranasal or oral routes of administration) when the physician counsels the patient/family; first administration (single or combination vaccine/toxoid), per day) and 90473 (Immunization administration by intranasal or oral route; one vaccine (single or combination vaccine/toxoid)).

Similarly, we are also proposing to crosswalk the PE values for CPT code 90472 (Immunization administration (includes percutaneous, intradermal, subcutaneous, or intramuscular injections); each additional vaccine (single or combination vaccine/toxoid) (List separately in addition to code for primary procedure)) to CPT codes 90468 (Immunization administration younger than age 8 years (includes intranasal or oral routes of administration) when the physician counsels the patient/family; each additional administration (single or combination vaccine/toxoid), per day (List separately in addition to code for primary procedure)) and 90474 (Immunization administration by intranasal or oral route; each additional vaccine (single or combination vaccine/toxoid) (List separately in addition to code for primary procedure)).

I. Refinement Panel Process

As discussed in the November 25, 1992 PFS final rule (57 FR 55938), we adopted a refinement panel process to assist us in reviewing the public comments on interim physician work RVUs for CPT codes with that status in each year and developing final work values for the subsequent year. Our decision to convene multispecialty panels of physicians was based on our need to balance the interests of those who commented on the work RVUs against the budgetary and redistributive effects that could occur if we accepted extensive increases in work RVUs across a broad range of services. The refinement panel reviews and discusses the work involved in each procedure and then each member individually rates the work of the procedure. Since 1992, the refinement panels' recommendation to change a work value or to retain the interim value has hinged solely on the outcome of a statistical test on the ratings (an F-test).

Depending on the number and range of codes that public commenters, typically specialty societies, request be subject to refinement, we establish refinement panels with representatives from 4 groups of physicians: Clinicians representing the specialty most identified with the procedures in question; physicians with practices in related specialties; primary care physicians; and contractor medical directors (CMDs). Typically the refinement panels meet in the summer prior to the promulgation of the final rule finalizing the RVUs for the codes. Typical panels have included 8 to 10 physicians across the 4 groups. Over time, the statistical test used to evaluate the RVU ratings of individual panel members have become less reliable as the physicians in each group have tended to select a previously discussed value, rather than independently evaluating the work. In addition, the resulting RVUs have occasionally exhibited rank order anomalies (that is, a more complex procedure is assigned lower RVUs than a less complex procedure).

Most recently, section 1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) authorizes the Secretary to review potentially misvalued codes and make appropriate adjustments to the relative values. In addition, MedPAC has encouraged CMS to critically review the values assigned to the services under the PFS. MedPAC has stated its belief that CMS has historically relied too heavily on specialty societies to identify services that are misvalued by accepting so many recommendations of the RUC.

We believe the refinement panel process continues to provide stakeholders with a meaningful opportunity for review and discussion of the interim work RVUs with a clinically diverse group of experts that then provides informed recommendations to CMS. Therefore, we would like to continue the refinement process, including the established composition that includes representatives from the 4 groups of physicians, but with administrative modification and clarification. Specifically, for refinement panels beginning in CY 2011 (that is, for those codes with CY 2011 interim values that would be subject to refinement during CY 2011), we are proposing to eliminate the use of the F-test and instead base revised RVUs on the median work value of the panel members' ratings. We believe this approach will simplify the refinement process administratively, while resulting in a final panel recommendation that reflects the summary opinion of the panel members based on a commonly used measure of central tendency that is not significantly affected by outlier values. In addition, we are clarifying that we have the final authority to set the RVUs, and therefore, may make adjustments to the work RVUs resulting from refinement if policy concerns warrant their modification.

J. Remote Cardiac Monitoring Services (CPT Codes 93012, 93229, 93268, and 93271)

In the CY 2010 PFS final rule with comment period (74 FR 61755), we indicated that we continued to have concerns about the issue of developing PE RVUs for services that are utilized 24 hours a day, 7 days a week (24/7), such as those that require certain monitoring system equipment. The PE equipment methodology was developed for equipment that is in use during standard physician's office business hours and not this type of 24/7 equipment. We stated that we would conduct further analysis of this issue. Services that were contractor-priced in CY 2009 remained contractor-priced in CY 2010. We also indicated that any proposed changes will be communicated through future rulemaking.

Since publication of the CY 2010 PFS final rule with comment period, we have focused our additional analysis on four of the CPT codes that commenters have brought to our attention because they involve concurrent, remote, 24/7 attended monitoring of multiple patients from a central location: CPT code 93012 (Telephonic transmission of post-symptom electrocardiogram rhythm strip(s); 24-hour attended monitoring, per 30 day period of time; tracing only); CPT code 93229 (Wearable mobile cardiovascular telemetry with electrocardiographic recording, concurrent computerized real time data analysis and greater than 24 hours of accessible ECG data storage (retrievable with query) with ECG triggered and patient selected events transmitted to a remote attended surveillance center for up to 30 days; technical support for connection and patient instructions for use, attended surveillance, analysis and physician prescribed transmission of daily and emergent data reports); CPT code 93268 (Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; includes transmission, physician review and interpretation); and CPT 93271 code (Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; monitoring, receipt of transmissions, and analysis).

Of these four codes, CPT code 93229 is currently contractor-priced in CY 2010, meaning that the local Medicare contractors determine payment rates for the service within the PFS geographic areas in their jurisdiction. The three services that are currently nationally-priced on the PFS are in the first year of a 4-year transition to lower payment rates based on the use of the PPIS data adopted in the CY 2010 PFS final rule with comment period. We refer readers to section II.A.2. of this proposed rule for a description of the general PFS PE methodology that is the basis for the following discussion of approaches to establishing PE RVUs for these four CPT codes.

We examined several alternative methods for developing PE RVUS upon which PFS payment rates for these four CPT codes could be based. Each of these services involves transmission of information from multiple patients who wear individual monitoring devices that transmit patient-specific information to centralized equipment that is simultaneously in use for multiple patients. We believe it would be most consistent with the principles underlying the PFS PE methodology to classify the centralized monitoring equipment as an indirect cost since it is servicing multiple patients at the same time. After classifying this equipment as an indirect cost, we used our standard methodology to calculate an indirect practice cost index value for each code based on the PE/HR survey data of the historical mix of specialties providing these services. Establishing payment rates for these codes based on this approach would result in decreases in the payment rates for these services, including the typical contractor's price for CPT code 93229. For the three services that are nationally priced, these decreases would be relative to the lower payment rates based on the use of the PPIS data after the 4-year transition.

We also received PE/HR data from the Remote Cardiac Services Provider Group (RCSPG), a group of IDTF suppliers of these types of services. For sensitivity analysis purposes, we substituted these data for the PE/HR data of the specialties performing these services, while continuing to treat the centralized monitoring equipment as an indirect cost. We found that establishing payment rates for these codes based on the approach of using the submitted RCSPG PE/HR data would again result in decreases in the payment rates for these services, including the typical contractor's price for CPT code 93229. As in the prior alternative, the decreases for the nationally priced codes would be relative to the payment rates reflecting the 4-year transition to the PPIS data.

Although we believe that it would be most consistent with the principles underlying the PE methodology to classify the centralized monitoring equipment as an indirect cost, we also performed a sensitivity analysis of the payment rates if the centralized monitoring equipment were classified as a direct cost. In this simulation, we assumed that the centralized monitoring equipment was in year-round use, 7 days per week for 24 hours per day. We found that establishing payment rates for these codes based on the approach of classifying the centralized monitoring equipment as a direct cost would again result in decreases in the payment rates for the nationally priced services relative to their payment rates after the 4-year transition to the use of the PPIS data, as well as to the typical current contractor's price for CPT code 93229.

Finally, we considered proposing contractor-pricing for all four of these services for CY 2011. However, we are cognizant of past public comments on this issue that have requested that all of these services be priced nationally on the PFS, including the one service (CPT code 93229) that is currently contractor-priced.

We also considered that the services currently priced nationally on the PFS are scheduled to receive lower payment rates under the 4-year transition to the PPIS data and that the contractor's price for CPT 93229 was recently reduced in the area where the majority of the billings for this service currently occur.

After taking all these factors into consideration, we are not proposing CY 2011 methodological or direct cost input changes for CPT codes 93012, 93268, or 93271—the services that are currently nationally priced under the PFS. We are also proposing to continue contractor-pricing for CPT 93229 for CY 2011. We continue to be interested in public comments on this issue, including responses to our analysis of alternative approaches to establishing PE RVUs for 24/7 services, and further discussion of the issues we have identified in our alternative pricing methodologies. In addition, while we have focused the 24/7 services analysis to date on developing the PE RVUs for remote cardiac monitoring services, there may be 24/7 services in other areas of medicine, either currently paid under the PFS or in development for the future. Therefore, we are also interested in public comments on these current or emerging 24/7 services, including descriptions of the similarities or differences between these other services and remote cardiac monitoring services, particularly with respect to the issues we have identified in our analysis of alternative approaches to establishing PE RVUs for remote cardiac monitoring services under the PFS.

IV. Medicare Telehealth Services for the Physician Fee Schedule Back to Top

A. Billing and Payment for Telehealth Services

1. History

Prior to January 1, 1999, Medicare coverage for services delivered via a telecommunications system was limited to services that did not require a face-to-face encounter under the traditional model of medical care. Examples of these services included interpretation of an x-ray or electrocardiogram or electroencephalogram tracing, and cardiac pacemaker analysis.

Section 4206 of the BBA provided for coverage of, and payment for, consultation services delivered via a telecommunications system to Medicare beneficiaries residing in rural health professional shortage areas (HPSAs) as defined by the Public Health Service Act. Additionally, the BBA required that a Medicare practitioner (telepresenter) be with the patient at the time of a teleconsultation. Further, the BBA specified that payment for a teleconsultation had to be shared between the consulting practitioner and the referring practitioner and could not exceed the fee schedule payment which would have been made to the consultant for the service provided. The BBA prohibited payment for any telephone line charges or facility fees associated with the teleconsultation. We implemented this provision in the CY 1999 PFS final rule with comment period (63 FR 58814).

Effective October 1, 2001, section 223 of the Medicare, Medicaid and SCHIP Benefits Improvement Protection Act of 2000 (Pub. L. 106-554) (BIPA) added a new section 1834(m) to the Act which significantly expanded Medicare telehealth services. Section 1834(m)(4)(F)(i) of the Act defines Medicare telehealth services to include consultations, office visits, office psychiatry services, and any additional service specified by the Secretary, when delivered via a telecommunications system. We first implemented this provision in the CY 2002 PFS final rule with comment period (66 FR 55246). Section 1834(m)(4)(F)(ii) required the Secretary to establish a process that provides for annual updates to the list of Medicare telehealth services. We established this process in the CY 2003 PFS final rule with comment period (67 FR 79988).

As specified in regulations at § 410.78(b), we generally require that a telehealth service be furnished via an interactive telecommunications system. Under § 410.78(a)(3), an interactive telecommunications system is defined as multimedia communications equipment that includes, at a minimum, audio and video equipment permitting two-way, real-time interactive communication between the patient and the practitioner at the distant site. Telephones, facsimile machines, and electronic mail systems do not meet the definition of an interactive telecommunications system. An interactive telecommunications system is generally required as a condition of payment; however, section 1834(m)(1) of the statute does allow the use of asynchronous “store-and-forward” technology in delivering these services when the originating site is a Federal telemedicine demonstration program in Alaska or Hawaii. As specified in regulations at § 410.78(a)(1), store and forward means the asynchronous transmission of medical information from an originating site to be reviewed at a later time by the practitioner at the distant site.

Medicare telehealth services may be provided to an eligible telehealth individual notwithstanding the fact that the individual practitioner providing the telehealth service is not at the same location as the beneficiary. An eligible telehealth individual means an individual enrolled under Part B who receives a telehealth service furnished at an originating site. As specified in BIPA, originating sites are limited under section 1834(m)(3)(C) of the statute to specified medical facilities located in specific geographic areas. The initial list of telehealth originating sites included the office of a practitioner, a critical access hospital (CAH), a rural health clinic (RHC), a federally qualified health center (FQHC) and a hospital. More recently, section 149 of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275) (MIPPA) expanded the list of telehealth originating sites to include hospital-based renal dialysis centers, skilled nursing facilities (SNFs), and community mental health centers (CMHCs). In order to serve as a telehealth originating site, these sites must be located in an area designated as a rural health professional shortage area (HPSA), in a county that is not in a metropolitan statistical area (MSA), or must be an entity that participates in a Federal telemedicine demonstration project that has been approved by (or receives funding from) the Secretary of Health and Human Services as of December 31, 2000. Finally, section 1834(m) of the statute does not require the eligible telehealth individual to be presented by a practitioner at the originating site.

2. Current Telehealth Billing and Payment Policies

As noted above, Medicare telehealth services can only be furnished to an eligible telehealth beneficiary in an originating site. An originating site is defined as one of the specified sites where an eligible telehealth individual is located at the time the service is being furnished via a telecommunications system. In general, originating sites must be located in a rural HPSA or in a county outside of an MSA. The originating sites authorized by the statute are as follows:

  • Offices of a physician or practitioner
  • Hospitals
  • CAHs
  • RHCs
  • FQHCs
  • Hospital-Based or Critical Access Hospital-Based Renal Dialysis Centers (including Satellites)
  • SNFs
  • CMHCs

Currently approved Medicare telehealth services include the following:

  • Initial inpatient consultations
  • Follow-up inpatient consultations
  • Office or other outpatient visits
  • Individual psychotherapy
  • Pharmacologic management
  • Psychiatric diagnostic interview examination
  • End Stage Renal Disease (ESRD) related services
  • Individual medical nutrition therapy (MNT)
  • Neurobehavioral status exam
  • Individual health and behavior assessment and intervention (HBAI)

In general, the practitioner at the distant site may be any of the following, provided that the practitioner is licensed under State law to furnish the service being furnished via a telecommunications system:

  • Physician
  • Physician assistant (PA)
  • Nurse practitioner (NP)
  • Clinical nurse specialist (CNS)
  • Nurse midwife
  • Clinical psychologist
  • Clinical social worker
  • Registered dietitian or nutrition professional

Practitioners furnishing Medicare telehealth services are located at a distant site, and they submit claims for telehealth services to the Medicare contractors that process claims for the service area where their distant site is located. Section 1834(m)(2)(A) of the Act requires that a practitioner who furnishes a telehealth service to an eligible telehealth individual be paid an amount equal to the amount that the practitioner would have been paid if the service had been furnished without the use of a telecommunications system. Distant site practitioners must submit the appropriate HCPCS procedure code for a covered professional telehealth service, appended with the -GT (Via interactive audio and video telecommunications system) or -GQ (Via asynchronous telecommunications system) modifier. By reporting the -GT or -GQ modifier with a covered telehealth procedure code, the distant site practitioner certifies that the beneficiary was present at a telehealth originating site when the telehealth service was furnished. The usual Medicare deductible and coinsurance policies apply to the telehealth services reported by distant site practitioners.

Section 1834(m)(2)(B) of the Act provides for payment of a facility fee to the originating site. To be paid the originating site facility fee, the provider or supplier where the eligible telehealth individual is located must submit a claim with HCPCS code Q3014 (Telehealth originating site facility fee), and the provider or supplier is paid according to the applicable payment methodology for that facility or location. The usual Medicare deductible and coinsurance policies apply to HCPCS code Q3014. By submitting HCPCS code Q3014, the originating site authenticates that it is located in either a rural HPSA or non-MSA county or is an entity that participates in a Federal telemedicine demonstration project that has been approved by (or receives funding from) the Secretary of Health and Human Services as of December 31, 2000 as specified in section 1834(m)(4)(C)(i)(III) of the Act.

As described above, certain professional services that are commonly furnished remotely using telecommunications technology, but that do not require the patient to be present in-person with the practitioner when they are furnished, are covered and paid in the same way as services delivered without the use of telecommunications technology when the practitioner is in-person at the medical facility furnishing care to the patient. Such services typically involve circumstances where a practitioner is able to visualize some aspect of the patient's condition without the patient being present and without the interposition of a third person's judgment. Visualization by the practitioner can be possible by means of x-rays, electrocardiogram or electroencephalogram tracings, tissue samples, etc. For example, the interpretation by a physician of an actual electrocardiogram or electroencephalogram tracing that has been transmitted via telephone (that is, electronically, rather than by means of a verbal description) is a covered physician's service. These remote services are not Medicare telehealth services as defined under section 1834(m). Rather, these remote services that utilize telecommunications technology are considered physicians' services in the same way as services that are furnished in-person without the use of telecommunications technology; they are paid under the same conditions as in-person physicians' services (with no requirements regarding permissible originating sites), and should be reported in the same way (that is, without the -GT or -GQ modifier appended).

B. Requests for Adding Services to the List of Medicare Telehealth Services

As noted above, in the December 31, 2002 Federal Register (67 FR 79988), we established a process for adding services to or deleting services from the list of Medicare telehealth services. This process provides the public with an ongoing opportunity to submit requests for adding services. We assign any request to make additions to the list of Medicare telehealth services to one of the following categories:

  • Category 1: Services that are similar to professional consultations, office visits, and office psychiatry services. In reviewing these requests, we look for similarities between the requested and existing telehealth services for the roles of, and interactions among, the beneficiary, the physician (or other practitioner) at the distant site and, if necessary, the telepresenter. We also look for similarities in the telecommunications system used to deliver the proposed service, for example, the use of interactive audio and video equipment.
  • Category 2: Services that are not similar to the current list of telehealth services. Our review of these requests includes an assessment of whether the use of a telecommunications system to deliver the service produces similar diagnostic findings or therapeutic interventions as compared with the in-person delivery of the same service. Requestors should submit evidence showing that the use of a telecommunications system does not affect the diagnosis or treatment plan as compared to in-person delivery of the requested service.

Since establishing the process to add or remove services from the list of approved telehealth services, we have added the following to the list of Medicare telehealth services: Individual HBAI services; psychiatric diagnostic interview examination; ESRD services with 2 to 3 visits per month and 4 or more visits per month (although we require at least 1 visit a month to be furnished in-person by a physician, CNS, NP, or PA in order to examine the vascular access site); individual MNT; neurobehavioral status exam; and initial and follow-up inpatient telehealth consultations for beneficiaries in hospitals and skilled nursing facilities (SNFs).

Requests to add services to the list of Medicare telehealth services must be submitted and received no later than December 31 of each calendar year to be considered for the next rulemaking cycle. For example, requests submitted before the end of CY 2010 are considered for the CY 2012 proposed rule. Each request for adding a service to the list of Medicare telehealth services must include any supporting documentation the requester wishes us to consider as we review the request. Because we use the annual PFS rulemaking process as a vehicle for making changes to the list of Medicare telehealth services, requestors should be advised that any information submitted is subject to public disclosure for this purpose. For more information on submitting a request for an addition to the list of Medicare telehealth services, including where to mail these requests, we refer readers to the CMS Web site at http://www.cms.gov/telehealth/.

C. Submitted Requests for Addition to the List of Telehealth Services for CY 2011

We received requests in CY 2009 to add the following services as Medicare telehealth services effective for CY 2011: (1) Individual kidney disease education (KDE) services; (2) individual diabetes self-management training (DSMT) services; (3) group KDE, DSMT, MNT, and HBAI services; (4) initial, subsequent, and discharge day management hospital care services; (5) initial, subsequent, discharge day management, and other nursing facility care services; (6) neuropsychological testing services; (7) speech-language pathology services; and (8) home wound care services. The following presents a discussion of these requests, including our proposals for additions to the CY 2011 telehealth list.

1. Individual KDE Services

The American Society of Nephrology, Dialysis Patient Citizens, AMGEN, and Kidney Care Partners submitted requests to add individual KDE services, reported by HCPCS code G0420 (Face-to-face educational services related to the care of chronic kidney disease; individual, per session, per one hour), to the list of approved telehealth services for CY 2011 on a category 1 basis.

Individual KDE services, covered under the new Medicare KDE benefit effective for services furnished beginning in CY 2010, are defined as face-to-face educational services provided to a patient with stage IV chronic kidney disease (CKD). We believe the interaction between a practitioner and a beneficiary receiving individual KDE services is similar to the education, assessment, and counseling elements of individual MNT services, reported by HCPCS code G0270 (Medical nutrition therapy; reassessment and subsequent intervention(s) following second referral in same year for change in diagnosis, medical condition or treatment regimen (including additional hours needed for renal disease), individual, face to face with the patient, each 15 minutes); CPT code 97802 (Medical nutrition therapy; initial assessment and intervention, individual, face-to-face with the patient, each 15 minutes); and CPT code 97803 (Medical nutrition therapy; re-assessment and intervention, individual, face-to-face with the patient, each 15 minutes), all services that are currently on the telehealth list.

Therefore, we are proposing to add HCPCS code G0420 to the list of telehealth services for CY 2011 on a category 1 basis. Consistent with this proposal, we are also proposing to revise our regulations at § 410.78(b) and § 414.65(a)(1) to include individual KDE as a Medicare telehealth service.

2. Individual DSMT Services

The Tahoe Forest Health System and the Marshfield Clinic submitted requests to add individual DSMT services, reported by HCPCS code G0108 (Diabetes outpatient self-management training services, individual, per 30 minutes), to the list of telehealth services for CY 2011 on a category 1 basis. In the CY 2009 PFS final rule with comment period (73 FR 69743), we stated that we believe individual DSMT services are not analogous to individual MNT services because of the element of skill-based training that is encompassed within individual DSMT services that is not an aspect of individual MNT services (or any other services currently approved for telehealth). Due to the statutory requirement that DSMT services include teaching beneficiaries the skills necessary for the self-administration of injectable drugs, we have stated our belief that DSMT, whether provided to an individual or a group, must be evaluated as a category 2 service as specified in the CY 2009 PFS proposed rule (73 FR 38516). We have considered several previous requests to add DSMT to the list of Medicare telehealth services. We have not added individual DSMT to the list of telehealth services because we believe that skill-based training, such as teaching patients how to inject insulin, would be difficult to accomplish effectively without the physical presence of the teaching practitioner (70 FR 45787 and 70157, and 73 FR 38516 and 69743).

In considering the new request to add individual DSMT services to the list of telehealth services in CY 2011, we have taken into account requestors' argument that individual DSMT services are highly similar to individual MNT services and that injection training constitutes just a small proportion of DSMT services. Except for the component of individual DSMT services that involves instruction in self-administration of injectable drugs for eligible beneficiaries, we agree with the requestors that individual DSMT services are similar to individual MNT services, which are currently on the list of Medicare telehealth services. We note that Medicare coverage of DSMT services was initially authorized in the Balanced Budget Act of 1997. After more than a decade of Medicare coverage, the most recent information shows that DSMT continues to be significantly underutilized in the context of the eligible population of Medicare beneficiaries. While we are uncertain to what extent geographic barriers to care contribute to this underutilization, given the morbidity associated with poorly managed diabetes and the growing evidence-base regarding effective DSMT services, we believe it is very important to facilitate Medicare beneficiary access to these underutilized services. While we have previously been concerned about treating the components of DSMT services differently in the context of considering DSMT services for the telehealth list, we believe that our concern regarding the skill-based injection training component of DSMT services can be addressed by imposing a requirement that a minimum portion of the training be furnished in-person. We note that for beneficiaries who meet the coverage criteria, Medicare covers 10 hours of DSMT services in the year following the initial training, as described in the Medicare Benefit Policy Manual (Pub. 100-02, Chapter 15, Section 300.3). Taking into consideration the initial year coverage of DSMT services, we are proposing that a minimum of 1 hour of instruction in injection training must be furnished in-person during the year following the initial DSMT service. Imposing this condition would allow us to expand access to DSMT services by adding individual DSMT services to the list of telehealth services, while ensuring effective injection training for beneficiaries.

Therefore, we are proposing to add HCPCS code G0108 to the list of telehealth services beginning in CY 2011. We are also proposing that, as a condition of payment for individual DSMT services furnished as telehealth services to an eligible telehealth individual, a minimum of 1 hour of in-person instruction in the self-administration of injectable drugs must be furnished to the individual during the year following the initial DSMT service. The injection training may be furnished through either individual or group DSMT services. By reporting the -GT or -GQ modifier with HCPCS code G0108 as a telehealth service, the distant site practitioner would certify that the beneficiary has received or will receive 1 hour of in-person DSMT services for purposes of injection training during the year following the initial DSMT service. Consistent with this proposal, we are proposing to revise our regulations at § 410.78(b) and § 414.65(a)(1) to include individual DSMT services as a Medicare telehealth service, with the exception of 1 hour of in-person instruction in self-administration of injectable drugs which must be furnished to the eligible telehealth individual as individual or group DSMT services during the year following the initial DSMT service.

We note that, as specified in § 410.141(e), individual DSMT services may be furnished by a physician, individual, or entity that furnishes other services for which direct Medicare payment may be made and that submits necessary documentation to, and is accredited by, an accreditation organization approved by CMS. However, consistent with the statutory requirements of section 1834(m)(1) of the Act and as provided in § 410.78(b)(1) and (b)(2) of our regulations, Medicare telehealth services, including individual DSMT furnished as a telehealth service, could only be furnished by a licensed PA, NP, CNS, certified nurse-midwife, clinical psychologist, clinical social worker, or registered dietitian or nutrition professional.

3. Group KDE, MNT, DSMT, and HBAI Services

The American Society of Nephrology, Dialysis Patient Citizens, AMGEN, Tahoe Forest Health Systems, Kidney Care Partners, the American Telemedicine Association, and the Marshfield Clinic submitted requests to add one or more of the following group services to the telehealth list for CY 2011:

  • Group KDE services, reported by HCPCS code G0421 (Face-to-face educational services related to the care of chronic kidney disease; group, per session, per one hour);
  • Group MNT services, reported by CPT code 97804 (Medical nutrition therapy; group (2 or more individual(s)), each 30 minutes);
  • Group DSMT services, reported by HCPCS code G0109 (Diabetes outpatient self-management training services, group session (2 or more), per 30 minutes); and/or
  • Group HBAI services, reported by CPT code 96153 (Health and behavior intervention, each 15 minutes, face-to-face; group (2 or more patients)) and 96154 (Health and behavior intervention, each 15 minutes, face-to-face; family (with the patient present)).

When furnished as individual services, HBAI and MNT services are currently on the list of Medicare telehealth services. Furthermore, we are proposing to add individual KDE and DSMT services to the list of Medicare telehealth services beginning in CY 2011 as described above.

In the CY 2007 and CY 2010 PFS rulemaking cycles (70 FR 45787 and 70157, and 74 FR 33543 and 61764), we stated that we did not believe that group services could be appropriately delivered through telehealth. We have observed that currently there are no group services approved as Medicare telehealth services and that there is a different interactive dynamic between the practitioner and his or her patients in group services as compared to individual services. We previously have considered requests to add various group services to the list of Medicare telehealth services on a category 2 basis because we have believed that, especially given the interactive dynamic between practitioners and their patients, group services are not similar to other services on the list of Medicare telehealth services. Therefore, we have maintained that it is necessary to evaluate the addition of group services by comparing diagnostic findings or therapeutic interventions when services are furnished via telehealth versus when services are furnished in-person.

We continue to believe that the group dynamic may be a critical and defining element for certain services, and that this characteristic precludes many group services from being considered on a category 1 basis for addition to the list of Medicare telehealth services. For example, we believe that due to the therapeutic nature of the group dynamic that is integral to group psychotherapy, group psychotherapy is fundamentally different from other Medicare telehealth services and, therefore, could not be considered on a category 1 basis for addition to the telehealth services list. For the same reason, in the absence of evidence to the contrary, we do not believe group psychotherapy services could be appropriately delivered through telehealth.

However, upon further consideration, with regard to the particular group education and training services for which we received requests for addition to the Medicare telehealth services list, we believe the group dynamic is not central to the core education and training components of these particular services, specifically DSMT, MNT, KDE, and HBAI services. We believe that these group services are sufficiently similar to the individual, related services that are already on the telehealth services list or are proposed for addition beginning in CY 2011. Specifically, we believe that for these group services, which consist principally of an information exchange for the purpose of education and training, the roles of, and interactions between, the patients and the practitioner are sufficiently similar to the related individual education and training services that the services can be furnished appropriately as a telehealth service.

Therefore, we are proposing to add HCPCS code G0421 for group KDE services, CPT code 97804 for group MNT services, HCPCS code G0109 for group DSMT services, and CPT codes 96153 and 96154 for group HBAI services to the Medicare telehealth services list on a category 1 basis. Furthermore, because the concerns we raised above regarding adequate injection training with the addition of individual DSMT are also present for group DSMT, we are proposing to require the same minimum of 1 hour of in-person instruction for injection training within the year following the initial DSMT service for any beneficiary that receives DSMT services via telehealth. By reporting the -GT or -GQ modifier with HCPCS code G0109, the distant site practitioner would certify that the beneficiary has received or will receive 1 hour of in-person DSMT services for purposes of injection training during the year following the initial DSMT service. Consistent with this proposal to add these group education and training services, we are also proposing to revise our regulations at § 410.78(b) and § 414.65(a)(1) to include group KDE, MNT, DSMT, and HBAI services as Medicare telehealth services, with the exception of 1 hour of in-person instruction of individual or group DSMT services in the year following the initial DSMT service.

As described above for individual DSMT services, we note that group DSMT services may be furnished by a physician, individual, or entity that furnishes other services for which direct Medicare payment may be made and that submits necessary documentation to, and is accredited by, an accreditation organization approved by CMS, as specified in § 410.141(e) for DSMT services. However, consistent with the statutory requirements of section 1834(m)(1) of the Act and as provided in § 410.78(b)(1) and (b)(2) of our regulations, Medicare telehealth services, including group DSMT furnished as a telehealth service, could only be furnished by a licensed PA, NP, CNS, certified nurse-midwife, clinical psychologist, clinical social worker, or registered dietitian or nutrition professional.

4. Initial, Subsequent, and Discharge Day Management Hospital Care Services

The University of Louisville School of Medicine, the American Telemedicine Association, and Mille Lacs Health System submitted various requests to add initial hospital care services (reported by CPT codes 99221 (Level 1 initial hospital care), 99222 (Level 2 initial hospital care), and 99223 (Level 3 initial hospital care)); subsequent hospital care services (reported by CPT codes 99231 (Level 1 subsequent hospital care), 99232 (Level 2 subsequent hospital care), and 99233 (Level 3 subsequent hospital care)); and/or hospital discharge day management services (reported by CPT codes 99238 (Hospital discharge day management; 30 minutes or less) and 99239 (Hospital discharge day management; more than 30 minutes) to the Medicare telehealth services list beginning in CY 2011, generally on a category 1 basis. Some of the requestors also recommended that we limit the delivery of these services through telehealth to the provision of services to patients with a psychiatric diagnosis or to those treated in a psychiatric hospital or licensed psychiatric bed.

We appreciate the recommendations of the requestors to substantially expand the list of Medicare telehealth services. The requestors submitted a number of studies regarding the outcomes of telehealth services in caring for patients with psychiatric diagnoses. However, we note that the CPT codes for hospital care services are used to report care for hospitalized patients with a variety of diagnoses, including psychiatric diagnoses. We do not believe it would be appropriate to add services to the telehealth list only for certain diagnoses because the service described by a HCPCS code is essentially the same service, regardless of the patient's diagnosis. When evaluating the addition of services for telehealth on a category 1 basis, our focus is on the roles of, and interactions among, the beneficiary, the physician or practitioner, and the telepresenter (if applicable), which generally are similar across diagnoses for services that may be reported with the same HCPCS codes. Even in the unique case of certain ESRD services, we limited additions to the list of Medicare telehealth services based on the appropriateness of certain specific codes, taking into consideration the full service descriptions (69 FR 47511). Therefore, we continue to believe that it is most appropriate to consider additions to the list of telehealth services based on the overall suitability of the services described by the relevant HCPCS codes to delivery through telehealth.

In the CY 2005, CY 2008, and CY 2009 PFS rulemakings (69 FR 47510 and 66276, 72 FR 38144 and 66250, and 73 FR 38517 and 69745, respectively), we did not add initial, subsequent, or discharge day management hospital care services to the list of approved telehealth services because of our concern regarding the use of telehealth for the ongoing evaluation and management (E/M) for the generally high acuity of hospital inpatients. While we continue to have some concern in this area, we also share the requestors' interest in improving access for hospitalized patients to care furnished by treating practitioners. Therefore, we have reevaluated these services in the context of the CY 2011 requests, including considering the possibility that these services could be added on a category 1 basis based on their resemblance to services currently on the telehealth list, such as initial and follow-up inpatient telehealth consultations. The following presents a discussion of our review of the subcategories of hospital care services included in these requests.

Currently, one of the three codes for an initial hospital care service (specifically CPT codes 99221, 99222, or 99223) is reported for the first hospital inpatient E/M visit to the patient by the admitting or a consulting practitioner when that visit is furnished in-person. In addition, we note that currently there are several HCPCS G-codes on the Medicare telehealth services list that may be reported for initial and follow-up inpatient consultations through telehealth, specifically HCPCS codes G0406 (Follow-up inpatient telehealth consultation, limited, physicians typically spend 15 minutes communicating with the patient via telehealth); G0407 (Follow-up inpatient telehealth consultation, intermediate, physicians typically spend 25 minutes communicating with the patient via telehealth); G0408 (Follow-up inpatient telehealth consultation, complex, physicians typically spend 35 minutes or more communicating with the patient via telehealth); G0425 (Initial inpatient telehealth consultation, typically 30 minutes communicating with the patient via telehealth); G0426 (Initial inpatient telehealth consultation, typically 50 minutes communicating with the patient via telehealth); and G0427 (Initial inpatient telehealth consultation, typically 70 minutes or more communicating with the patient via telehealth).

While initial inpatient consultation services are currently on the list of approved telehealth services, there are no services on the current list of telehealth services that resemble initial hospital care for an acutely ill patient by the admitting practitioner who has ongoing responsibility for the patient's treatment during the hospital course. Therefore, we are unable to consider initial hospital care services on a category 1 basis for the telehealth list.

We have reviewed the documentation submitted in support of adding the initial hospital care codes to the Medicare telehealth services list as category 2 requests. Most of the studies provided by the requestors were specific to the treatment of patients with particular diagnoses. Additionally, the studies were not specific to initial hospital care visits by admitting practitioners. Finally, most of the studies concluded that more research was required in order to establish medical equivalence between telehealth and in-person services. Therefore, we received no information that provides robust support for the addition of initial hospital care services to the approved telehealth list on a category 2 basis. The initial hospital care codes describe the first visit to the hospitalized patient by the admitting practitioner who may or may not have seen the patient in the decision-making phase regarding hospitalization. We believe it is critical that the initial hospital visit by the admitting practitioner be conducted in-person to ensure that the practitioner with ongoing treatment responsibility comprehensively assesses the patient's condition upon admission to the hospital through a thorough in-person examination. Therefore, we are not proposing to add initial hospital care services to the Medicare telehealth services list for CY 2011.

We have again considered adding subsequent hospital care services reported by CPT codes 99231 through 99233 to the telehealth list for CY 2011 on a category 1 basis. In the CY 2005 and CY 2008 PFS proposed rules (69 FR 47511 and 72 FR 38155), we stated that the potential acuity of patients in the hospital setting precludes consideration of subsequent hospital visits as similar to existing telehealth services. However, as stated earlier, we also note that HCPCS codes for initial and follow-up inpatient consultation services are on the list of telehealth services. These E/M services are furnished to high acuity hospitalized patients, although not by the admitting practitioner himself or herself. However, in light of the increasingly prevalent care model that entails multidisciplinary team care for patients with complex medical illnesses that involve multiple body systems, consulting practitioners may often play a key, intensive, and ongoing role in caring for hospitalized patients. Therefore, we believe that subsequent hospital care visits by a patient's admitting practitioner may sufficiently resemble follow-up inpatient consultation services to consider these subsequent hospital care services on a category 1 basis for the telehealth list. While we still believe the potential acuity of hospital inpatients is greater than those patients likely to receive currently approved Medicare telehealth services, we also believe that it would be appropriate to permit some subsequent hospital care services to be furnished through telehealth in order to ensure that hospitalized patients have frequent encounters with their admitting practitioner. However, we also continue to believe that the majority of these visits should be in-person to facilitate the comprehensive, coordinated, and personal care that medically volatile, acutely ill patients require on an ongoing basis.

Therefore, we are proposing that subsequent hospital care services, specifically CPT codes 99231, 99232, and 99233, be added to the list of telehealth services on a category 1 basis for CY 2011, but with some limitations on the frequency that these services may be furnished through telehealth. Because of our concerns regarding the potential acuity of hospital inpatients, we are proposing to limit the provision of subsequent hospital care services through telehealth to once every 3 days. We are confident that admitting practitioners will continue to make appropriate in-person visits to all patients who need such care during their hospitalization. Consulting practitioners should continue to use the inpatient telehealth consultation HCPCS G-codes, specifically G0406, G0407, G0408, G0425, G0426, or G0427 when reporting consultations furnished to inpatients via telehealth.

Consistent with this proposal, we are proposing to revise § 410.78(b) and § 414.65(a)(1) to include subsequent hospital care services as Medicare telehealth services, with the limitation of one telehealth subsequent hospital care service every 3 days.

We also considered adding hospital discharge day management services to the list of telehealth services. These services, reported by CPT codes 99238 and 99239, include the final examination of the patient, discussion of the hospital stay, instructions for continuing care to all relevant caregivers, and preparation of discharge records, prescriptions, and referral forms. These services are furnished when a practitioner deems it medically reasonable and necessary to assess a patient's readiness for discharge and to prepare a patient for discharge from an acute care environment to a less intensive setting. There are no services on the current list of telehealth services that resemble such preparation of a patient for discharge. We believe it is especially important that, if a practitioner furnishes a discharge day management service, the service be furnished in-person in order to allow the practitioner to comprehensively assess the patient's status in preparation for discharge so that the patient will have a higher likelihood of making a successful transition to the less intensive setting. Therefore, we are not considering hospital discharge day management services for addition to the Medicare telehealth services list on a category 1 basis.

We have reviewed the documentation submitted by requestors in support of adding these codes to the Medicare telehealth services list on a category 2 basis. Most of the submitted studies were specific to the treatment of patients with specific diagnoses and were not specific to discharge services. Additionally, most of the studies concluded that more research was required in order to establish medical equivalence between telehealth and in-person services. The submitted documentation did not provide the necessary evidence to alter our previous conclusion that hospital discharge day management services should be provided in-person in light of the acuity of hospitalized patients, their typically complex post-hospitalization care needs, and the importance of patient education by the admitting practitioner who had ongoing responsibility for the patient's treatment during the hospital stay. Therefore, we are not proposing to add hospital discharge day management services to the list of telehealth services for CY 2011.

5. Initial, Subsequent, Discharge Day Management, and Other Nursing Facility Care Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add nursing facility care codes, covering the spectrum of initial (reported by CPT codes 99304 (Level 1 initial nursing facility care), 99305 (Level 2 initial nursing facility care) and 99306 (Level 3 initial nursing facility care)); subsequent (reported by CPT codes 99307 (Level 1 subsequent nursing facility care), 99308 (Level 2 subsequent nursing facility care), 99309 (Level 3 subsequent nursing facility care), and 99310 (Level 4 subsequent nursing facility care)); discharge day management (reported by CPT codes 99315 (Nursing facility discharge day management; 30 minutes or less) and 99316 (Nursing facility discharge day management; more than 30 minutes)); and other (reported by CPT code 99318 (Evaluation and management of a patient involving an annual nursing facility assessment)) services, to the Medicare telehealth services list beginning in CY 2011. The requests for the addition of these services expressed concerns regarding limited access to care if we do not allow these services to be furnished through telehealth, and requested that CMS acknowledge the recent Congressional inclusion of nursing facilities as telehealth originating sites by adding these codes to the list of Medicare telehealth services.

In the CY 2010 PFS proposed and final rules (74 FR 33544 and 74 FR 61762), we discussed concerns about potential disparities in patient acuity between nursing facility services and the current list of Medicare telehealth services. We have also declined to add HCPCS codes to the Medicare telehealth services list that are used exclusively to describe Federally-mandated nursing facility visits. As discussed in the CY 2010 PFS proposed rule (74 FR 33543), the long-term care regulations at § 483.40(c) require that residents of SNFs receive initial and periodic personal visits. These regulations ensure that at least a minimal degree of personal contact between a practitioner and a SNF resident is maintained, both at the point of admission to the facility and periodically during the course of the resident's stay. We continue to believe that these federally-mandated visits should be conducted in-person, and not as Medicare telehealth services. Therefore, in the CY 2010 PFS final rule with comment period, we revised § 410.78 to preclude physicians and other practitioners from furnishing the physician visits required under § 483.40(c) through telehealth.

We reviewed the use of telehealth for each of the subcategories of nursing facility services included in the requests for CY 2011. We identified the E/M services that fulfill Federal requirements for personal visits under § 483.40(c), and we are not proposing for CY 2011 to add any HCPCS codes to the Medicare telehealth services list that are used exclusively to describe these Federally-mandated visits. These codes include the CPT codes for initial nursing facility care (CPT codes 99304 through 99306) that are used to report the initial E/M visit that fulfills Federally-mandated requirements under § 483.40(c) and other nursing facility service (CPT code 99318) that is only payable by Medicare if the visit is substituted for a federally-mandated visit under § 483.40(c).

The nursing facility discharge day management services reported under CPT code 99315 and 99316 are E/M visits that prepare a nursing facility resident for discharge from the facility. There are no Medicare requirements that such a service be furnished. If a practitioner chooses to furnish this service, we continue to believe that an in-person visit is most appropriate in order to ensure the resident is prepared for discharge from the nursing facility. These services are furnished when a practitioner deems it medically reasonable and necessary to assess a patient's readiness for and to prepare a patient being discharged from the monitored nursing facility environment to another typically less intensive setting. There are no services on the current list of telehealth services that resemble such preparation of a patient for discharge. As in the case of hospital discharge day management services, we believe it is especially important that, if a practitioner furnishes a nursing facility discharge day management service, the service be furnished in-person. The practitioner must be able to comprehensively assess the patient's status in preparation for discharge so that the patient will have a higher likelihood of making a successful transition from the nursing facility to another setting. Therefore, we are not considering nursing facility discharge day management services for addition to the Medicare telehealth services list on a category 1 basis. When we considered the addition of these services under category 2, we had no evidence that nursing facility discharge services furnished through telehealth are equivalent to in-person discharge services. Therefore, we are not proposing to add nursing facility discharge day management services to the CY 2011 telehealth list.

Subsequent nursing facility services, reported by CPT codes 99307 through 99310, may be used to report either a federally-mandated periodic visit under § 483.40(c) or another E/M visit, prior to or after the initial nursing facility care visit, as long as the subsequent nursing facility care visit is medically reasonable and necessary for the resident's care. While we continue to believe that many SNF residents have complex medical care needs, we believe that it is appropriate to consider the addition of these codes to the telehealth list on a category 1 basis. As we state above in the context of our discussion of subsequent hospital care services, the HCPCS codes for initial and follow-up inpatient consultation services for nursing facility patients are on the list of Medicare telehealth services, and subsequent nursing facility services are similar to those services. These E/M services are furnished to high acuity, complex SNF patients, although not by the admitting practitioner himself or herself. Therefore, we believe that subsequent nursing facility visits by a patient's admitting practitioner sufficiently resemble follow-up inpatient consultation services to consider them on a category 1 basis for the telehealth list. We have concluded that it would be appropriate to permit some subsequent nursing facility care services to be furnished through telehealth to ensure that complex nursing facility patients have frequent encounters with their admitting practitioner, although we continue to believe that the federally-mandated visits should be in-person to facilitate the comprehensive, coordinated, and personal care that these complex patients require on an ongoing basis.

Therefore, we are proposing that subsequent nursing facility care services, specifically CPT codes 99307, 99308, 99309 and 99310, be added to the list of Medicare telehealth services on a category 1 basis beginning in CY 2011, with some limitations on furnishing these services through telehealth. Because of our concerns regarding the potential acuity and complexity of SNF inpatients, we are proposing to limit the provision of subsequent nursing facility care services furnished through telehealth to once every 30 days. We are especially interested in public comments, including any evidence regarding patterns of high quality care and clinical outcomes, regarding this proposal to limit the provision of subsequent nursing facility care services furnished through telehealth to once every 30 days. We remain committed to ensuring that SNF inpatients receive appropriate in-person visits and that Medicare pays only for medically reasonable and necessary care. Currently and continuing in CY 2011, an unlimited number of initial and follow-up consultation services may be furnished through telehealth to these patients so we believe that only a limited number of subsequent nursing facility care services by the admitting practitioner would be appropriate for SNF inpatients. Finally, we are specifying that subsequent nursing facility care services reported for a Federally-mandated periodic visit under § 483.40(c) may not be furnished through telehealth. In light of this proposal for CY 2011, we remain confident that admitting practitioners will continue to make appropriate in-person visits to all patients who need such care during their SNF stay.

Consistent with this proposal, we are proposing to revise § 410.78(b) and § 414.65(a)(1) to include subsequent nursing facility care services as Medicare telehealth services, with the limitation of one telehealth subsequent nursing facility care service every 30 days. Federally-mandated periodic visits may not be furnished through telehealth, as specified currently in § 410.78(e)(2).

6. Neuropsychological Testing

The American Telemedicine Association submitted a request to add neuropsychological testing services, described by CPT codes 96119 (Neuropsychological testing (e.g., Halstead-Reitan Neuropsychological Battery, Wechsler Memory Scales and Wisconsin Card Sorting Test), per hour of the psychologist's or physician's time, both face-to-face time administering tests to the patient and time interpreting these test results and preparing the report); and 96119 (Neuropsychological testing (e.g., Halstead-Reitan Neuropsychological Battery, Wechsler Memory scales and Wisconsin Card Sorting Test), with qualified health care professional interpretation and report, administered by technician, per hour of technician time, face-to-face), to the list of telehealth services for CY 2011 based on their similarity to other telehealth services.

In the CY 2008 PFS final rule with comment period (72 FR 66251), we stated that we have received conflicting comments and data regarding the appropriateness of furnishing neuropsychological testing via telehealth. While we appreciate the recent request for addition of these same services to the Medicare telehealth services list, we do not believe that these services are similar to services currently on the Medicare telehealth services list and, therefore, we conclude that they would not be appropriate for consideration or addition under category 1. In this year's request for the addition of the these services, we received no information to indicate that the diagnostic findings of neuropsychological testing through telehealth are similar to those based upon in-person testing, and therefore, that testing through telehealth does not affect the patient's diagnosis. Therefore, we are not proposing to add neuropsychological testing services to the list of approved Medicare telehealth services for CY 2011.

7. Speech-Language Pathology Services

The Marshfield Clinic submitted a request to add various speech-language pathology services to the list of approved telehealth services for CY 2011. Speech-language pathologists are not permitted under section 1842(b)(18)(C) of the Act to furnish and receive payment for Medicare telehealth services. Therefore, we are not proposing to add any speech-language pathology services to the list of Medicare telehealth services for CY 2011. For further discussion of these services in the context of telehealth, we refer readers to the CY 2005 and CY 2007 PFS proposed and final rules with comment period (69 FR 47512 and 66276, and 71 FR 48995 and 69657).

8. Home Wound Care Services

Wound Care Associates, LLC, submitted a request to add wound care in the home setting to the list of Medicare telehealth services. A patient's home is not permitted under current statute to serve as an originating site for Medicare telehealth services. Therefore, we are not proposing to add home wound care services to the list of Medicare telehealth services for CY 2011.

D. Summary of CY 2011 Telehealth Proposals

In summary, we are proposing to add the following requested services to the list of Medicare telehealth services for CY 2011:

  • Individual and group KDE services (HCPCS codes G0420 and G0421, respectively);
  • Individual and group DSMT services, with a minimum of 1 hour of in-person instruction to be furnished in the year following the initial DSMT service to ensure effective injection training (HCPCS codes G0108 and G0109, respectively);
  • Group MNT and HBAI services (CPT codes 97804, and 96153 and 96154, respectively);
  • Subsequent hospital care services, with the limitation for the patient's admitting practitioner of one telehealth visit every 3 days (CPT codes 99231, 99232, and 99233); and
  • Subsequent nursing facility care services, with the limitation for the patient's admitting practitioner of one telehealth visit every 30 days (CPT codes 99307, 99308, 99309, and 99310).

Furthermore, we are proposing to revise § 410.78(b) and § 414.65(a)(1) accordingly. Specifically, we are proposing to add individual and group KDE services, individual and group DSMT services, group MNT services, group HBAI services, and subsequent hospital care and nursing facility care services to the list of telehealth services for which payment will be made at the applicable PFS payment amount for the service of the practitioner. In addition, we have reordered the listing of services in these two sections and removed “initial and follow-up inpatient telehealth consultations furnished to beneficiaries in hospitals and SNFs” in § 410.78(b) because these are described by the more general term “professional consultations” that is in the same section. Finally, we are continuing to specify that the physician visits required under § 483.40(c) may not be furnished as telehealth services.

V. Provisions of the Patient Protection and Affordable Care Act of 2010 Back to Top

The following section addresses certain provisions of the Patient Protection and Affordable Care Act (Pub. L. 111-148), enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) enacted on March 30, 2010 (collectively known as the Affordable Care Act (ACA)).

A. Section 3002: Improvements to the Physician Quality Reporting System

Section 3002 of ACA makes a number of changes to the Physician Quality Reporting Initiative (PQRI), including authorizing incentive payments through 2014, and requiring a penalty beginning in 2015, for eligible professionals who do not satisfactorily submit quality data. For a more detailed discussion of the provisions of section 3002 of the ACA, please refer to section VI.G.1. of this proposed rule.

B. Section 3003: Improvements to the Physician Feedback Program and Section 3007: Value-based Payment Modifier Under the Physician Fee Schedule

1. Background

As required under section 1848(n) of the Act, as added by section 131(c) of MIPPA, we established and implemented by January 1, 2009, the Physician Resource Use Measurement & Reporting (RUR) Program for purposes of providing confidential reports to physicians that measure the resources involved in furnishing care to Medicare beneficiaries. Section 1848(n) of the Act also authorizes CMS to include information on the quality of care furnished to Medicare beneficiaries by a physician or group of physicians.

We are continuing a phased implementation of the program. Phase I was discussed in the CY 2010 proposed and final rules (74 FR 33589, and 74 FR 61844, respectively), and has been completed. Phase I consisted of several activities including extensive data analysis to inform decisions about topics such as measures, attribution, and risk adjustment and formative testing of report design with practicing physicians. We concluded Phase I by sending to individual practicing physicians in 12 geographic areas [1] several hundred reports that contained per capita and episode-based cost information.

Phase I of the Program focused on providing confidential feedback on resource use measures. Section 1848(n)(1)(A)(iii) of the Act states that the Secretary may also include information on the quality of care furnished to Medicare beneficiaries by physicians (or groups of physicians) in the feedback reports. We believe that providing physicians with feedback on both quality and cost is consistent with the direction of other CMS value based purchasing (VBP) initiatives. As a result, we decided to include quality measures in Phase II of the program and, in particular, we considered measures used in PQRI and claims-based measures such as GEM measures (74 FR 61846).

Section 1848(n)(1)(A)(ii) also states that the Secretary may provide reports at the physician group level. Accordingly, as part of Phase II of the program, we will also include reporting to group practices, defined as more than one physician practicing medicine together (74 FR 61846). In addition, we noted that the definition applies to the following types of physician groups: (1) Formally established single or multi-specialty group practices; (2) physicians practicing in defined geographic regions; and (3) physicians practicing within facilities or larger systems of care (74 FR 61846). As we continue with Phase II, we plan to report to both physician group practices and their affiliated practitioners, recognizing that many physicians practice in arrangements other than solo practices. We believe that using both group and individual level reporting will also allow us to gain experience with the sample size issues that arise when individual physicians have too few Medicare beneficiaries with specific conditions to generate reliable information. (See the CY 2010 final rule with comment period (74 FR 61844) for a detailed discussion of plans for Phase II.)

2. Effect of the ACA of 2010 on the Program

The ACA contains two provisions relevant to the RUR program. Section 3003 continues the confidential feedback program and requires the Secretary, beginning in 2012, to provide reports that compare patterns of resource use of individual physicians to other physicians. In addition, section 3007 of the ACA requires the Secretary to apply a separate, budget-neutral payment modifier to the Fee-For-Service physician fee schedule payment formula. The payment modifier, which will be phased in beginning January 1, 2015 through January 1, 2017, will provide for differential payment under the fee schedule to a physician or groups of physicians, and later, possibly to other eligible professionals, based upon the relative quality and cost of care of their Medicare beneficiaries. Accordingly, our goal is to have Medicare physicians receive a confidential feedback report prior to implementation of the payment modifier. We view these two provisions as complementary, as we expect the work done for the confidential feedback program under section 3003 of the ACA will inform our implementation of the payment modifier under section 3007 of the ACA. The approach used in the confidential feedback reports will serve as the foundation for implementing the payment modifier. Specifically, throughout future phases of reports under the RUR program, we will continue to enhance our measures and methods and improve the content of the reports based on both our research and the feedback of stakeholders before the payment modifier begins to affect physician payments in 2015.

We plan to engage in a large-scale effort to garner widespread stakeholder involvement with regard to how we continue to build and expand the confidential feedback program and transition to implementation of the payment modifier. We recognize that such a payment modifier may have an impact on the delivery of care to Medicare beneficiaries. Reports that will be produced in the future based on changes as a result of section 3003 of the ACA will contain both cost and quality data, and work done to improve these reports with regard to fair and actionable measures in each of these domains will aid our decision making in how to apply the payment modifier. We intend to seek stakeholder input on various aspects of program design, including cost and quality measures, methodologies for compositing measures, and feedback report content and delivery. Such feedback may be gathered through rulemaking, open door forums, or other mechanisms.

3. Phase II Proposed Changes

We anticipate that reports in Phase II of the RUR Program will be distributed in the fall of 2010. We are proposing, however, several changes to the program parameters for Phase II that were finalized in prior rules. First, we plan to discontinue our use of commercially-available proprietary episode grouping software. In particular, section 3003 of the ACA requires that the Secretary develop a Medicare-specific episode grouper by January 1, 2012, the details of which must be made public. This grouper will address the limitations found in the proprietary software.

We recognize that episode-specific cost information is meaningful and actionable for physicians, and we plan to provide such information in feedback reports after the public grouper software is developed. Prior to that, we may consider other potential interim options for grouping to provide such information. We believe that our use of proprietary episode grouping software in previous phases of the program had limitations. These software products were not intended for use with Medicare claims data, and we discovered several problems with the data outputs. Specifically, the groupers do not work well to create episodes for beneficiaries with multiple chronic conditions, which is a significant portion of Medicare beneficiaries.

For example, when a beneficiary with a chronic disease is hospitalized for an acute condition, that beneficiary most likely also receives treatments unrelated to the condition for which he or she is hospitalized, but related to the chronic disease. The groupers, which are proprietary and often referred to as “black boxes,” do not enable users to understand the coding to determine how to accomodate these issues. Therefore, CMS had to make several decisions about how to pre-process the claims data so that the groupers could recognize and attempt to deal with these issues in the clinical grouping logic. After report production in Phase I, we discovered several problems with the pre-processing, which resulted in inaccurate episode cost information being disseminated.

Until a Medicare-specific episode grouping software is developed, we plan to produce reports for Phase II that contain per capita cost information. More specifically, instead of episode-specific cost information, we plan to provide overall per capita cost information, as well as per capita cost information for those beneficiaries with five common chronic diseases: (1) Diabetes, (2) congestive heart failure, (3) coronary artery disease, (4) chronic obstructive pulmonary disease, and (5) prostate cancer. This information will not be specific to the cost of treating the disease itself, but will provide total Part A/B per capita cost information, as well as service category breakdowns, for treating the subset of attributed beneficiaries with that disease.

Second, while commenters have been generally supportive of including PQRI measures in the reports, we propose not including data from PQRI in the reports. The current support contractor for this program has only 2007 PQRI data. This was the first year of PQRI, and participation was still quite low. Because of the low number of physicians reporting under PQRI, and because providers have the flexibility to choose which measures to report under PQRI, we believe it would be difficult to make meaningful peer comparisons for purposes of these reports. Instead, for Phase II, we propose using the claims-based measures developed by CMS in the Generating Medicare Physician Quality Performance Measurement Results (GEM) project. [2] This is a core set of 12 process quality measures that can be calculated using only administrative claims data. However, in future phases of the program, we intend to explore the possibility of linking this program to the HITECH incentive program for meaningful use of electronic health records, and the group practice reporting option in PQRI. Both of these programs offer measures and measure sets, as well as methods of reporting data which may be more conducive to meaningful peer comparisons among physicians.

Third, we propose to distribute reports electronically in Phase II, by leveraging the infrastructure used to distribute PQRI feedback reports. This infrastructure will enable groups to utilize an electronic portal to download their Phase II reports. Individual practitioners will be able to contact their MACs/fiscal intermediaries to receive an e-mailed copy of their reports. We have received feedback from physicians that the reports distributed in Phase I were too long and cumbersome to manage in hard copy. Our intent is a condensed report with electronic dissemination that allows for easier navigation. We are seeking public comment on the above proposals.

4. Implementation of Sections 3003 and 3007 of the ACA

The Affordable Care Act provisions that we mention above contain several important implementation dates. In addition to developing an episode grouper by January 1, 2012, we are required to publish the cost and quality measures we intend to use in determining the payment modifier to be effective on January 1, 2012. We are also required to begin implementing the program parameters through rulemaking in 2013. The payment modifier is effective on January 1, 2015, with a phased implementation so that all physicians paid under the physician fee schedule will be subject to the modifier by January 1, 2017. On or after January 1, 2017, we have the authority to also apply the payment modifier to other eligible professionals.

In anticipation of implementing sections 3003 and 3007 of the ACA, we intend to perform extensive data analysis and research, and to seek stakeholder input on issues related to cost and quality measures so that we can be prepared to publish, by January 1, 2012, those measures we intend to use for the payment modifier. We intend for the work done in determining measures for use in the payment modifier to inform the continued dissemination of confidential feedback reports to both individual physicians and physician groups. Specifically, the measures chosen for use in the payment modifier will be candidates for inclusion in future phases of the confidential feedback reports.

As mentioned above, Phase I included reports to several hundred physicians. In Phase II we anticipate disseminating reports to about 40 large physician groups and the approximately 2,000 physicians affiliated with those groups. We anticipate future phases of the reports to include additional dissemination to increasing numbers of practitioners and groups such that virtually every applicable Medicare practitioner receives a report prior to implementation of the payment modifier.

5. Comments Sought on Specific Statistical Issues Related to the ACA Sections 3003 and 3007

We recognize that there are many important decisions to be made when implementing a program that compares physicians to their peers, especially when such information can lead to differential payment. Since the inception of the RUR program, all data have been price standardized which includes accounting for geographic adjustments. We have identified important statistical issues in previous rules, and as we have done in previous rules, CMS seeks input on several of these topics as they relate to future phases of reports. These include, but are not limited to: risk adjustment; attribution; benchmarking; peer groups; minimum case sizes; cost and quality measures; and compositing methods. To date, the public comments we have received have not led us to a single methodology to propose for dealing with any of these issues. Therefore, we do not make formal proposals in this proposed rule. Specific parameters of the RUR program are based on the most current information we have available to us. These parameters will continue to evolve and we will continue to evaluate them as the state of the art in these areas continues to improve. Therefore, we seek public comment on these issues.

a. Risk Adjustment

The cost data used in Phase I will be risk adjusted. For the per capita costs, we used the Hierarchical Condition Categories (HCC) model developed for risk adjustment in Medicare Advantage plans. This model takes into account beneficiary characteristics such as age, sex, and Medicaid status, and then predicts costs for beneficiaries based on their unique mix of health conditions. Several other socioeconomic factors, such as the median income per capita in the county where the physician practices, were used. For the episode costs, we used the risk adjustment/severity levels in the proprietary grouper software.

The cost data in Phase II are risk adjusted using the HCC model, but excluding the additional socioeconomic factors such as the median income per capita in the county where the physician practices, as mentioned above. Regression analyses indicated that these additional socioeconomic factors did little to improve the fit of the model, so we will not include them. And since there are no episode-based costs in Phase II—only annual per capita costs—the HCC model will be the only method used. Other methods of risk adjustment exist that we have not used, such as the CC (complications and comorbidities) and MCC (major complications and comorbidities) indicators implemented in the 2008 MS-DRG system.

The quality data included in Phase II will not be risk adjusted because the GEM measures are all clinical process measures, and it is generally accepted that such measures need not be risk adjusted. Beneficiaries should receive the indicated preventive services (for example, breast cancer screening) regardless of their demographic characteristics or presence or absence of health conditions.

We seek comment on the appropriate method for risk adjusting cost data, as well as our reasoning for not risk adjusting clinical process quality measures.

b. Attribution

Deciding which physician(s) is/are responsible for the care of which beneficiaries is an important aspect of measurement. CMS must strike a balance between only attributing cost information to physicians for the services they personally delivered, and attributing costs to physicians based on a more encompassing view of the services provided to each beneficiary so as to encourage better care coordination and accountability for patient outcomes.

There are several methods that are generally used for attributing beneficiaries' costs to physicians for the purposes of measuring and comparing performance. In Phase I, we used two different attribution methodologies. Half of the reports used the “multiple-proportional” attribution, in which a beneficiary's costs were summed, and then divided among the physicians who treated that beneficiary in the same proportion as their share of evaluation and management (E&M) services provided. The other half of the reports used the “plurality-minimum” method, in which a beneficiary's entire cost (either for the episode or for the year) was attributed to the physician who performed the plurality of the E&M services, subject to a minimum percentage (in that case, 10 percent).

In Phase II reports, we plan to use the “plurality-minimum” method with a minimum percentage threshold of E&M services of 20 percent for individual physicians and a minimum percentage threshold of E&M services of 30 percent of the E&M services for physician group level reports. These minimum threshold determinations were based on our analysis of the claims data. We recognize that other attribution methods exist, which may be either more or less appropriate given the aspect of care one is measuring. For example, it may be desirable to attribute the entire cost of a surgical episode to the performing surgeon. Another method for attributing costs is referred to as “multiple-even,” in which the entire beneficiary's cost is attributed to multiple physicians who treated the beneficiary.

We seek comment on the topic of attribution methodologies, including both of those we have already used in the program, as well as others that may or may not be mentioned here.

c. Benchmarking and Peer Groups

Determining the relevant comparisons to make among physicians is also an important policy aspect of the program. CMS' research conducted in Phase I of the program indicated that physicians prefer to be compared only to those physicians most like them (that is, the narrowest peer group). We recognize the importance of fair comparison, but are also faced with the challenge that very narrow peer groups are most often not large enough to make statistically significant comparisons.

The individual-level reports in both phases of the program have contained, or will contain, two peer group comparisons: (1) Physicians in the same specialty in the same geographic area; and (2) physicians in the same specialty across all 12 geographic areas. In each of these peer groups, a physician is shown where he or she falls on a distribution that specifically identified the 10th, 50th, and 90th percentiles. These benchmarks were finalized on an interim basis in the CY 2010 proposed rule (74 FR 33589).

In determining applicability for episode measures in Phase I, we used a statistical reliability test. For per capita measures in Phase I, a physician had to have 20 or more beneficiaries to be measured and compared. There was no minimum peer group size requirement.

The original MIPPA mandate requires CMS to make comparisons among physicians on cost, and gives the Secretary the authority to include comparisons on quality. The use of quality measures in the program was finalized in the CY 2010 final rule (74 FR 61846). In Phase II, comparisons with appropriate peer groups will be made for both cost and quality. Phase II reports will be provided only to those physicians that have 30 or more patients for each of the cost measures. For the quality measures, we plan to use the measure specifications in the GEM project to define minimum case sizes, which are at least 11 beneficiaries. We also plan to impose a minimum peer group size of 30 in Phase II for both the cost and quality measures. A minimum sample size of 30 is generally accepted in the research community as the minimum sample size to represent a group and make comparisons.

We seek comment on the most appropriate and relevant peer groups for comparison, including the appropriate minimum case sizes and minimum peer group sizes. We are also interested in methodologies that can account for small case sizes.

d. Cost and Quality Measures and Compositing Methods

As mentioned above, and in previous rules, section 1848(n)(1)(A)(ii) of the Act gives the Secretary the authority to include both cost and quality information in the feedback reports. In Phase I, we chose to use only cost information, and used both per capita and episode cost measurements. As mentioned above, we previously finalized the use of quality measures in Phase II (74 FR 61846), but propose to discontinue our use of episode cost measurements. We have yet to include any composite measures of cost or quality in the feedback reports.

Section 3007 of the ACA requires CMS to pay physicians differentially based on a modifier derived with composites of both quality and cost measures. Accordingly, we will need to devise a methodology in the future for compositing cost measures and quality measures, including considering, among other things, possible methodologies to develop a single score. In the future, episode-based cost measures developed using the public Medicare-specific episode grouper software also may be considered in developing a composite score. Other domains of measures that may be considered include patient-level utilization statistics (for example, emergency department visits per 1,000 patients) and structural measures such as whether a provider has adopted an electronic health record. We recognize that measure composites are methodologically and operationally complex and, therefore, we are seeking comment on this topic.

We plan to continue a phased approach in the future. Although we will continue to move from phase-to-phase, any substantive changes to the RUR program will be implemented through rulemaking. We also anticipate continuing to gather feedback from stakeholders about the important data-driven policy topics that affect the feedback reports.

C. Section 3102: Extension of the Work Geographic Index Floor and Revisions to the Practice Expense Geographic Adjustment Under the Medicare Physician Fee Schedule, and Protections for Frontier States as Amended by Section 10324

Section 1848(e)(1)(E) of the Act (as amended by section 3102(a) of the ACA) extends application of the 1.0 work GPCI floor for services furnished through December 31, 2010. In addition, section 1848(e)(1) of the Act (as amended by section 3102(b) of the ACA) specifies that for CY 2010 and CY 2011, the employee wage and rent portions of the PE GPCI must reflect only one-half of the relative cost differences for each locality compared to the national average and includes a “hold harmless” provision for any PFS locality that would receive a reduction to its PE GPCI resulting from the limited recognition of cost differences. Section 1848(e)(1) of the Act (as amended by section 3102(b) of the ACA) also requires an analysis of the current methods and data sources used to determine the relative cost differences in office rent and employee wages compared to the national average and the cost share weights assigned to each PE GPCI component: Employee wages, office rent, and supplies. Finally, section 1848(e)(1) of the Act (as amended by section 3102(b) of the ACA) requires the Secretary to make appropriate adjustments to the PE GPCI by no later than January 1, 2012. In addition, section 1848(e)(1) of the Act (as amended by section 10324(c) of the ACA) establishes a 1.0 PE GPCI floor for services furnished in frontier states effective January 1, 2011. The provisions of the ACA related to the GPCIs are discussed in detail in section II.D. of this proposed rule.

D. Section 3103: Extension of Exceptions Process for Medicare Therapy Caps

Section 1833(g)(5) of the Act (as amended by section 3103 of the ACA) extends the exceptions process for therapy caps through December 31, 2010. Therapy caps are discussed in detail in section III.A. of this proposed rule.

E. Section 3104: Extension of Payment for Technical Component of Certain Physician Pathology Services

Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554), as amended by section 732 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173), section 104 of division B of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 109-432), section 104 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), and section 136 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275) is amended by section 3104 of the ACA to continue payment to independent laboratories for the TC of physician pathology services for fee-for-service Medicare beneficiaries who are inpatients or outpatients of a covered hospital through CY 2010. The technical component (TC) of physician pathology services refers to the preparation of the slide involving tissue or cells that a pathologist interprets. The professional component (PC) of physician pathology services refers to the pathologist's interpretation of the slide.

When the hospital pathologist furnishes the PC service for a hospital patient, the PC service is separately billable by the pathologist. When an independent laboratory's pathologist furnishes the PC service, the PC service is usually billed with the TC service as a combined service.

Historically, any independent laboratory could bill the Medicare contractor under the PFS for the TC of physician pathology services for hospital patients even though the payment for the costs of furnishing the pathology service (but not its interpretation) was already included in the bundled inpatient stay payment to the hospital. In the CY 2000 PFS final rule with comment period (64 FR 59408 through 59409), we stated that this policy has contributed to the Medicare program paying twice for the TC service: (1) To the hospital, through the inpatient prospective payment rate, when the patient is an inpatient; and (2) to the independent laboratory that bills the Medicare contractor, instead of the hospital, for the TC service. While the policy also permits the independent laboratory to bill for the TC of physician pathology services for hospital outpatients, in this case, there generally would not be duplicate payment because we would expect the hospital to not also bill for the pathology service, which would be paid separately to the hospital only if the hospital were to specifically bill for it. We further indicated that we would implement a policy to pay only the hospital for the TC of physician pathology services furnished to its inpatients.

Therefore, in the CY 2000 PFS final rule with comment period, we revised § 415.130(c) to state that for physician pathology services furnished on or after January 1, 2001 by an independent laboratory, payment is made only to the hospital for the TC furnished to a hospital inpatient. Ordinarily, the provisions in the PFS final rule with comment period are implemented in the following year. However, the change to § 415.130 was delayed 1 year (until January 1, 2001), at the request of the industry, to allow independent laboratories and hospitals sufficient time to negotiate arrangements.

Full implementation of § 415.130 was further delayed by section 542 of the BIPA and section 732 of the MMA, which directed us to continue payment to independent laboratories for the TC of physician pathology services for hospital patients for a 2-year period beginning on January 1, 2001 and for CYs 2005 and 2006, respectively.

In the CY 2007 MPFS final rule with comment period (71 FR 69624 and 69788), we amended § 415.130 to provide that, for services furnished after December 31, 2006, an independent laboratory may not bill the carrier for the TC of physician pathology services furnished to a hospital inpatient or outpatient. However, section 104 of the MIEA-TRHCA continued payment to independent laboratories for the TC of physician pathology services for hospital patients through CY 2007, and section 104 of the MMSEA further extended such payment through the first six months of CY 2008.

Section 136 of the MIPPA extended the payment through CY 2009. Most recently, section 3104 of the ACA amended the prior legislation to extend the payment through CY 2010.

Consistent with this legislative change, we are proposing to revise § 415.130(d) to: (1) Amend the effective date of our payment policy to reflect that for services furnished after December 31, 2010, an independent laboratory may not bill the Medicare contractor for the TC of physician pathology services furnished to a hospital inpatient or outpatient; and (2) reformat this subsection into subparagraphs.

F. Sections 3105 and 10311: Extension of Ambulance Add-Ons

1. Amendment to Section 1834(l)(13) of the Act

Section 146(a) of the MIPPA amended section 1834(l)(13)(A) of the Act to specify that, effective for ground ambulance services furnished on or after July 1, 2008 and before January 1, 2010, the ambulance fee schedule amounts for ground ambulance services shall be increased as follows:

  • For covered ground ambulance transports which originate in a rural area or in a rural census tract of a metropolitan statistical area, the fee schedule amounts shall be increased by 3 percent.
  • For covered ground ambulance transports which do not originate in a rural area or in a rural census tract of a metropolitan statistical area, the fee schedule amounts shall be increased by 2 percent.

Sections 3105(a) and 10311(a) of the ACA further amend section 1834(l)(13)(A) of the Act to extend the payment add-ons described above for an additional year, such that these add-ons also apply to covered ground ambulance transports furnished on or after January 1, 2010 and before January 1, 2011. We are revising § 414.610(c)(1)(i) to conform the regulations to this statutory requirement. This statutory requirement is self-implementing. A plain reading of the statute requires only a ministerial application of the mandated rate increase, and does not require any substantive exercise of discretion on the part of the Secretary. For further information regarding the extension of these payment add-ons, please see Transmittal 706 (Change Request 6972) dated May 21, 2010.

2. Amendment to Section 146(b)(1) of MIPPA

Section 146(b)(1) of the MIPPA amended the designation of rural areas for payment of air ambulance services. The statute specified that any area that was designated as a rural area for purposes of making payments under the ambulance fee schedule for air ambulance services furnished on December 31, 2006, shall continue to be treated as a rural area for purposes of making payments under the ambulance fee schedule for air ambulance services furnished during the period July 1, 2008 through December 31, 2009. Sections 3105(b) and 10311(b) of the ACA amend section 146(b)(1) of MIPPA to extend this provision for an additional year, through December 31, 2010. Accordingly, for areas that were designated as rural on December 31, 2006, and were subsequently re-designated as urban, we have re-established the “rural” indicator on the ZIP Code file for air ambulance services, effective January 1, 2010 through December 31, 2010. We are revising § 414.610(h) to conform the regulations to this statutory requirement. This statutory requirement is self-implementing. A plain reading of the statute requires only a ministerial application of a rural indicator, and does not require any substantive exercise of discretion on the part of the Secretary. For further information regarding the extension of this MIPPA provision, please see Transmittal 706 (Change Request 6972) dated May 21, 2010.

3. Amendment to Section 1834(l)(12) of the Act

Section 414 of the MMA added paragraph (12) to section 1834(l) of the Act, which specified that in the case of ground ambulance services furnished on or after July 1, 2004, and before January 1, 2010, for which transportation originates in a qualified rural area (as described in the statute), the Secretary shall provide for a percent increase in the base rate of the fee schedule for such transports. The statute requires this percent increase to be based on the Secretary's estimate of the average cost per trip for such services (not taking into account mileage) in the lowest quartile of all rural county populations as compared to the average cost per trip for such services (not taking into account mileage) in the highest quartile of rural county populations. Using the methodology specified in the July 1, 2004 interim final rule (69 FR 40288), we determined that this percent increase was equal to 22.6 percent. As required by the MMA, this payment increase was applied to ground ambulance transports that originated in a “qualified rural area”; that is, to transports that originated in a rural area included in those areas comprising the lowest 25th percentile of all rural populations arrayed by population density. For this purpose, rural areas included Goldsmith areas (a type of rural census tract). Sections 3105(c) and 10311(c) of the ACA amend section 1834(l)(12)(A) of the Act to extend this rural bonus for an additional year through December 31, 2010. Therefore, as directed by the ACA, we are continuing to apply the rural bonus described above (in the same manner as in previous years), to ground ambulance services with dates of service on or after January 1, 2010 and before January 1, 2011 where transportation originates in a qualified rural area.

We are revising § 414.610(c)(5)(ii) to conform the regulations to this statutory requirement. This statutory requirement is self-implementing. The statute requires a one-year extension of the rural bonus (which was previously established by the Secretary), and does not require any substantive exercise of discretion on the part of the Secretary. For further information regarding the extension of this rural bonus, please see Transmittal 706 (Change Request 6972) dated May 21, 2010.

G. Section 3107: Extension of Physician Fee Schedule Mental Health Add-On

Section 3107 of the ACA amends section 138(a)(1) of the MIPPA to continue the 5 percent increase in Medicare payment for specified mental health services through December 31, 2010. This payment increase was originally authorized under section 138 of the MIPPA from July 1, 2008 until December 31, 2009. Accordingly, payment for the 24 psychiatry CPT codes in Table 33, representing “specified services,” remains increased by 5 percent until December 31, 2010.

Table 33—Specified Mental Health Services Subject to the Five Percent Increase in Medicare Payment Through December 31, 2010 Back to Top
Office or Other Outpatient Facility
Insight Oriented, Behavior Modifying and/or Supportive Psychotherapy
90804(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient).
90805(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services).
90806(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient).
90807(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services).
90808(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient).
90809(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services).
Interactive Psychotherapy
90810(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient).
90811(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services).
90812(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient).
90813(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services).
90814(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient).
90815(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services).
Inpatient Hospital, Partial Hospital or Residential Care Facility
Insight Oriented, Behavior Modifying and/or Supportive Psychotherapy
90816(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient).
90817(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services).
90818(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient).
90819(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services).
90821(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient).
90822(Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services).
Interactive Psychotherapy
90823(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient).
90824(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services).
90826(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient).
90827(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services).
90828(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient).
90829(Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services).

H. Section 3108: Permitting Physician Assistants To Order Post-Hospital Extended Care Services

The ACA included a self-implementing provision relating to SNFs. Section 3108 adds physician assistants (PAs) to the list of practitioners (that is, physicians, nurse practitioners (NPs), and clinical nurse specialists) that can perform the required initial certification and periodic recertifications under section 1814(a)(2)(B) of the Act with respect to the SNF level of care. Accordingly, we are proposing to make appropriate revisions to include PAs in § 424.20(e)(2), in which we refer to NPs, clinical nurse specialists, and PAs collectively as “physician extenders.”

I. Section 3111: Payment for Bone Density Tests

Section 1848(b) of the Act (as amended by section 3111 of the ACA) changes the payment calculation for dual-energy X-ray absorptiometry (DXA) services described by two specified DXA CPT codes for CYs 2010 and 2011. This provision requires payment for these services at 70 percent of the product of the CY 2006 RVUs for these DXA codes, the CY 2006 conversion factor (CF), and the geographic adjustment for the relevant payment year.

Effective January 1, 2007, the CPT codes for DXA services were revised. The former DXA CPT codes 76075 (Dual energy X-ray absorptiometry (DXA), bone density study, one or more sites; axial skeleton (e.g., hips, pelvis, spine)); 76076 (Dual energy X-ray absorptiometry (DXA), bone density study, one or more sites; appendicular skeleton (peripheral) (e.g., radius, wrist, heel)); and 76077 (Dual energy X-ray absorptiometry (DXA), bone density study, one or more sites; vertebral fracture assessment) were deleted and replaced with new CPT codes 77080, 77081, and 77082 that have the same respective code descriptors as the predecessor codes. Section 1848(b) of the Act (as amended by section 3111 of the ACA) specifies that the revised payment applies to two of the predecessor codes (CPT codes 76075 and 76077) and “any succeeding codes,” which are, in this case, CPT codes 77080 and 77082.

Section 1848(b) (as amended by section 3111 of the ACA) revises the payment for CPT codes 77080 and 77082 during CY 2010 and CY 2011. We have provided payment in CY 2010 under the PFS for CPT codes 77080 and 77082 at the specified rates. We note that the RVUs included in Addendum B to this proposed rule reflect the RVUs that result from application of this statutory provision and the proposed CY 2011 conversion factor. Because the statute specifies a payment amount for these services as described previously, we imputed RVUs for CY 2011 to include in Addendum B that would provide the specified payment amount for these services when multiplied by the CY 2011 CF. Specifically, we divided the payment amount based on the statutory requirements by the CY 2011 CF for this proposed rule, and distributed the imputed total RVUs across the work, PE, and malpractice components proportionately to their CY 2006 distribution. Therefore, these imputed RVUs for CPT codes 77080 and 77082 are displayed in Addendum B to this proposed rule.

J. Section 3114: Improved Access for Certified Nurse-Midwife Services

Section 1833(a)(1)(K) of the Act (as amended by section 3114 of the ACA) increases the amount of Medicare payment made under the PFS for certified nurse-midwife (CNM) services. Currently, section 1833(a)(1)(K) of the Act specifies that the payment amount for CNM services is 80 percent of the lesser of the actual charge or 65 percent of the PFS amount. Under section 1833(a)(1)(K) of the Act (as amended by section 3114 of the ACA), effective for services furnished on or after January 1, 2011, Medicare payment for CNM services is increased to 100 percent of the PFS amount (or 80 percent of the actual charge if that is less). We are proposing to revise our regulations at § 414.54 (Payment for certified nurse-midwives' services) accordingly to reflect the increased payment for CNM services effective for services furnished on or after January 1, 2011.

Although CNMs are currently paid under Medicare Part B for their professional services, there is no mention of CNMs under the regulatory provision that lists the providers and suppliers of services to whom payment is made under the Medicare Part B program. Accordingly, we are proposing to make a technical revision to § 410.150 (To whom payment is made) to specify that Medicare Part B pays CNMs for professional services in all settings, as well as services and supplies furnished incident to those services.

CNMs are authorized under the statute to be paid directly for services that they are legally authorized to furnish under State law and that are of the type that would otherwise be covered if furnished by a physician or incident to a physician's services. Additionally, there is no requirement under the CNM benefit for physician oversight or supervision. Accordingly, CNMs are authorized to personally furnish diagnostic tests that fall under their State scope of practice without regard to the levels of physician supervision required under the diagnostic tests benefit. Therefore, we are amending § 410.32(b)(2) (Exceptions to the levels of physician supervision required for diagnostic tests) to include CNMs who furnish diagnostic tests that fall within their State scope of practice.

K. Section 3122: Extension of Medicare Reasonable Costs Payments for Certain Clinical Diagnostic Laboratory Tests Furnished to Hospital Patients in Certain Rural Areas

Section 416 of the MMA established a reasonable cost payment for outpatient clinical diagnostic laboratory tests furnished by hospitals with fewer than 50 beds that are located in qualified rural areas for cost reporting periods beginning during the 2-year period beginning on July 1, 2004.

Section 105 of the Tax Relief and Health Care Act of 2006 (Pub. L. 109-432) (TRHCA) extended the 2-year period in section 416(b) of the MMA for an additional cost-reporting year.

Section 107 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173) (MMSEA) extended the time period for cost reporting periods beginning on July 1, 2004, and ending on June 30, 2008. For some hospitals with cost reports that began as late as June 30, 2008, this extension affected services performed as late as June 29, 2009, because this was the date those cost reports would have closed.

Section 3122 of the ACA reinstitutes reasonable cost payment for clinical diagnostic laboratory tests performed by hospitals with fewer than 50 beds that are located in qualified rural areas as part of their outpatient services for cost reporting periods beginning on or after July 1, 2010, through June 30, 2011. For some hospitals with cost reports that begin as late as June 30, 2011, this reinstitution of reasonable cost payment could affect services performed as late as June 29, 2012, because this is the date those cost reports will close.

L. Section 3134: Misvalued Codes Under the Physician Fee Schedule

Section 1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) requires the Secretary to periodically review and identify potentially misvalued codes and make appropriate adjustments to the relative values of those services identified as being potentially misvalued. Section 1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) further specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services, as well as conduct surveys or implement other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the review and appropriate adjustment of the relative values of potentially misvalued codes. Finally, section 1848(c)(2)(L) of the Act (as added by section 3134 of the ACA) provides that the Secretary shall establish a process to validate relative value units under the PFS.

We note that over the past several years, we have been working with the AMA RUC to identify approaches to addressing the issue of potentially misvalued services. Our proposed CY 2011 approaches to categories of potentially misvalued codes are discussed in section II.C. of this proposed rule.

M. Section 3135: Modification of Equipment Utilization Factor for Advanced Imaging Services

1. Adjustment in Practice Expense To Reflect Higher Presumed Utilization

Section 1848(b)(4)(C) of the Act (as added by section 3135(a) of the ACA) adjusts the utilization rate for expensive diagnostic imaging equipment to 75 percent in the methodology for establishing the PE of the associated procedures. As discussed further in section II.A.3.a. of this proposed rule, effective January 1, 2011, we are proposing to assign a 75 percent equipment utilization rate assumption to expensive diagnostic imaging equipment used in services described by the HCPCS codes displayed in Table 4.

In the CY 2010 PFS final rule with comment period (74 FR 61755), we finalized a policy to increase the utilization rate to 90 percent for expensive diagnostic equipment priced at more than $1 million (CT and MRI scanners), providing for a 4-year transition to the 90 percent utilization rate from the CY 2009 utilization rate of 50 percent. Therefore, in CY 2010 we were transitioning to a 90 percent equipment utilization rate assumption, applying a 25/75 blend of the new and old PE RVUs, respectively, for the associated procedures. Section 1848(b)(4)(C) of the Act (as added by section 3135(a) of the ACA) does not provide for any further transition and, therefore, we are assigning a 75 percent equipment utilization rate assumption to CT and MRI scanners, effective January 1, 2011. Under section 1848(b)(4) of the Act (as amended by section 3135(a) of the ACA), this change in the equipment utilization rate assumption from CY 2010 to CY 2011 is not budget neutral under the PFS. The equipment utilization rate assumption remains at 50 percent for all other equipment included in the PFS PE methodology.

2. Adjustment in Technical Component “Discount” on Single-Session Imaging to Consecutive Body Parts

Section 1848(b)(4)(D) of the Act (as added by section 3135(a) of the ACA) increases the established PFS multiple procedure payment reduction (MPPR) for the technical component (TC) of certain single-session imaging services to consecutive body areas from 25 to 50 percent, effective July 1, 2010, and section 1848(c)(2)(B)(v)(VI) of the Act (as added by section 3135(b) of the ACA) exempts this change from the PFS budget neutrality provision. This policy is discussed in detail in section II.C.4 of this proposed rule.

Effective January 1, 2006, we adopted an MPPR of 25 percent for the technical component (TC) of certain diagnostic imaging procedures, applied to the second and subsequent services when more than one service in one of 11 imaging families, defined by imaging modality and contiguous body area, is furnished in a single session (70 FR 70261 through 70263). The established imaging MPPR applies to TC-only services and to the TC of global services. It does not apply to professional component (PC) services. Under this policy, full payment was made for the TC of the highest priced procedure, while payment was made at 75 percent of the TC for each additional procedure. As of July 1, 2010, and continuing in CY 2011, payment is made at 50 percent of the TC for each additional procedure, consistent with the statutory provision.

N. Section 3136: Revision for Payment for Power-Driven Wheelchairs

1. Payment Rules for Power Wheelchairs

Durable medical equipment (DME) is defined at section 1861(n) of the Act and includes wheelchairs necessary for use in the patient's home. Section 1861(n) provides that wheelchairs included in the definition of DME “may include a power-operated vehicle that may be appropriately used as a wheelchair, but only where the use of such a vehicle is determined to be necessary on the basis of the individual's medical and physical condition.” The general Medicare payment rules for DME are set forth in section 1834(a) of the Act and 42 CFR part 414, subpart D of our regulations. Section 1834(a)(1) of the Act and § 414.210(a) of our regulations establish that the Medicare payment for a DME item is generally equal to 80 percent of either the lower of the actual charge or the fee schedule amount for the item. The beneficiary coinsurance is generally equal to 20 percent of either the lower of the actual charge or the fee schedule amount for the item once the deductible is met.

For Medicare payment purposes, power wheelchairs or power-driven wheelchairs are classified under various codes in the Healthcare Common Procedure Coding System (HCPCS) based on the level of performance and functional characteristics of each power wheelchair that accommodate the specific needs of patients. Power wheelchairs classified under performance Groups 1 through 3 are covered under Medicare for use in the patient's home. Power wheelchair groups were established in 2006 with the release of the Power Mobility Device Coding Guidelines published by the Durable Medical Equipment Regional Carriers (DMERCs) currently called the Durable Medical Equipment Medicare Administrative Contractors (DME MACs). The DMEPOS quality standards define certain power wheelchairs falling as “complex, rehabilitative” power wheelchairs, and these “complex, rehabilitative” power wheelchairs are treated as a separate product category for the purpose of implementing the DMEPOS Competitive Bidding Program (CBP) mandated by section 1847(a) of the Act. In both the quality standards and the DMEPOS competitive bidding program, complex, rehabilitative power wheelchairs are defined or identified as power wheelchairs classified as Group 2 power wheelchairs with power options that can accommodate rehabilitative features (for example, tilt in space) or Group 3 power wheelchairs.

With the exception of power wheelchairs furnished during calendar year 1990, power wheelchairs have been paid under the capped rental category of DME since January 1, 1989. The payment rules for capped rental DME are provided at section 1834(a)(7) of the Act and § 414.229 of our regulations. Payment for these items is generally on a monthly rental basis, with rental payments capped at 13 months. After a 13-month period of continuous use during which rental payments are made, the statute and regulations require that the supplier transfer title to the wheelchair to the beneficiary. In addition, effective for power wheelchairs furnished on or after January 1, 1***, section 1834(a)(7) of the Act, as amended by section 4152(c)(2) (D) of the Omnibus Budget Reconciliation Act of 1990 (101), mandates that the supplier of the power wheelchair offer the patient the option to purchase rather than rent the item. Since 1991, over 95 percent of Medicare beneficiaries have exercised this lump-sum purchase option for power wheelchairs.

Consistent with payment for other DMEPOS items, § 414.210(f)(1) permits payment for replacement of capped rental DME if the item has been in continuous use for the equipment's reasonable useful lifetime or is lost, stolen, or irreparably damaged. Section 414.210(f)(1) states the reasonable useful lifetime for equipment is determined through program instructions. In the absence of CMS program instructions, the carrier may determine the reasonable useful lifetime for equipment, but in no case can it be less than 5 years. Computation is based on when the equipment is delivered to the beneficiary, not the age of the equipment. If the beneficiary elects to obtain a new capped rental item after the reasonable useful lifetime, a new 13-month rental payment period would begin for the new equipment in accordance with the requirements of § 414.229.

Section 1834(a)(7)(A) of the Act, § 414.229(b) and (c) set forth the current fee schedule amounts for capped rental items. Pursuant to section 1834(a)(7)(A)(i)(II) of the Act and § 414.229(b), the current rental fee schedule amounts for months 1 thru 3 of the 13-month capped rental period are calculated to pay 10 percent of the average of allowed purchase price for the item. The rental fee schedule amounts for months 4 thru 13 of the 13-month capped rental period are calculated to pay 7.5 percent of the average of allowed purchase price for the item. The purchase price is determined consistent with section 1834(a)(8) of the Act and § 414.229(c) and § 414.220(e) and (f) and is updated by the covered item update, as required by section 1834(a)(14) of the Act and § 414.229(d). The current purchase price amount for power wheelchairs acquired on a lump sum purchase basis is 100 percent of the purchase price calculated for the item when rented, as discussed above.

2. Revision of Payment Amounts for Power Wheelchairs

Section 3136(a) of the ACA made several changes to section 1834(a)(7)(A) of the Act. Section 3136(a)(1) of the ACA amends section 1834(a)(7)(A) of the Act by adding a new subclause (III) to section 1834(a)(7)(A)(i) of the Act. Subclause (III) revises the capped rental fee schedule amounts for all power wheelchairs, modifying the current payment structure of 10 percent of the purchase price for months 1 thru 3 and 7.5 percent of that purchase price for months 4 through 13 that was discussed above. The rental fee schedule amount for months 1 thru 3 of the 13-month capped rental period for power wheelchairs is revised to 15 percent of the purchase price for the item. The rental fee schedule amounts for months 4 thru 13 of the 13-month capped rental period for power wheelchairs is revised to 6 percent of the purchase price for the item. The statutory provision does not change the methodologies used to calculate and subsequently update of the purchase price of power wheelchairs. Therefore, the methodology described above for determining the purchase price amounts will continue to apply.

Pursuant to section 3136(c) of the ACA, the changes made by section 3136(a) of the ACA apply to power-driven wheelchairs furnished on or after January 1, 2011.

Furthermore, as discussed above, section 3136(c)(2) of the ACA states that the changes made by section 3136(a), including the new payment structure for power wheelchairs, do not apply to payment made for items and services furnished pursuant to contracts entered into under section 1847 of the Act for the DMEPOS CBP prior to January 1, 2011 which applies to the implementation of the first round of the DMEPOS CBP. As a result, contract suppliers furnishing power wheelchairs in competitive bidding areas (CBA) pursuant to contracts entered into prior to January 1, 2011 as part of Round 1 of the DMEPOS CBP will continue to be paid based under the current regulations using 10 percent of the purchase price for months 1 through 3 and 7.5 percent for each of the remaining months. As a result, we are proposing to make changes to §§ 414.202, 414.229 and 414.408 to reflect these statutory requirements.

3. Elimination of Lump Sum Payment for Standard Power Wheelchairs

Section 3136(a)(2) of the ACA further amends section 1834(a)(7)(A)(iii) by inserting the term “complex rehabilitative” before the term “power-driven wheelchairs.” As a result, section 1834(a)(7)(A)(iii) of the Act now extends the lump sum purchase option only to complex rehabilitative power wheelchairs. As discussed above, “complex rehabilitative power wheelchairs are power wheelchairs that are classified as: (1) Group 2 power wheelchairs with power options that can accommodate rehabilitative features (for example, tilt in space), or (2) Group 3 power wheelchairs. We consider all other power wheelchairs to be standard power wheelchairs. Therefore, we propose to interpret the language “complex rehabilitative” in section 1834(a)(7)(A) of the Act consistent with this longstanding classification. As a result, the changes made by section 3136 to section 1834(a)(7)(A)(iii) eliminate the lump sum purchase option for standard power wheelchairs.

Pursuant to section 3136(c) of the ACA, the changes made to section 1834(a)(7)(A)(iii) of the Act apply to power-driven wheelchairs furnished on or after January 1, 2011. The lump sum purchase payment option will no longer extend to standard power driven wheelchairs furnished on or after January 1, 2011.

Furthermore, section 3136(c)(2) of the ACA states that the changes made by section 3136(a), including the limitation of the lump sum purchase payment option to complex, rehabilitative power wheelchairs, do not apply to payment made for items and services furnished pursuant to contracts entered into under section 1847 of the Act for the DMEPOS CBP prior to January 1, 2011 pursuant to the implementation of the first round of the DMEPOS CBP. As a result, contract suppliers furnishing power wheelchairs in CBAs pursuant to contracts entered into prior to January 1, 2011 as part of Round 1 of the DMEPOS CBP must continue to offer beneficiaries the lump sum purchase option for all power wheelchairs.

We are proposing changes to §§ 414.229 and 414.408 to reflect our interpretation of these statutory requirements.

O. Section 3139: Payment for Biosimilar Biological Products

Section 3139 of the ACA amends section 1847A of the Act to provide for Medicare payment of biosimilar biological products using the average sale price (ASP) methodology.

Section 1847A of the Act, as amended by the ACA, defines a biosimilar biological product as a biological product approved under an abbreviated application for a license of a biological product that relies in part on data or information in an application for another biological product licensed under section 351 of the Public Health Service Act (PHSA). The reference biological product for a biosimilar biological product is defined by the statute as the biological product licensed under such section 351 of the PHSA that is referred to in the application of the biosimilar biological product.

The ACAct also amends section 1847A of the Act to specify that the payment amount for a biosimilar biological product will be the sum of the following two amounts: the ASP of all NDCs assigned to the biosimilar biological drug product determined using the methodology in section 1847A(b)(6) of the Act, and 6 percent of the payment amount determined using the methodology in section 1847A(b)(4) of the Act for the corresponding reference biological product. Sections 7001 to 7003 of the ACA also established a licensing pathway for biosimilar biological products, and in accordance with the statute, the effective date for Medicare ASP statutory provisions is July 1, 2010. We are proposing conforming regulation text changes at § 414.902 and § 414.904 and we welcome comments on these conforming changes.

We anticipate that as biosimilar biological drug products are approved, we will receive ASP sales data through the ASP data submission process and publish national payment amounts in a manner that is consistent with our current approach to other drugs and biologicals that are paid under section 1847A of the Act and set forth in 42 CFR part 414 subpart J. Until we have collected sufficient sales data, as reported by manufacturers, payment limits will be determined in accordance with the provisions in section 1847A(c)(4) of the Act. If no manufacturer data is collected, prices will be determined by local contractors using any available pricing information, including provider invoices. More information about the ASP payment methodology and the data submission process may be found on the CMS Web site at http://www.cms.gov/McrPartBDrugAvgSalesPrice/01_overview.asp and in this rule, in the section VI.A.1. of this proposed rule, “Carry Over” ASP.

P. Section 3401: Revision of Certain Market Basket Updates and Incorporation of Productivity Improvements Into Market Basket Updates That Do Not Already Incorporate Such Improvements

1. ESRD Market Basket Discussion

Section 3401(h) of the ACA amended section 1881(b)(14)(F) of the Act and directs the Secretary to annually increase payment amounts established under the ESRD market basket. Please see section VI.E. of this proposed rule for a detailed description of these provisions.

2. Productivity Adjustment Regarding Ambulatory Surgical Center, Ambulance, Clinical Laboratory and DMEPOS Fee Schedules

Section 3401 of the ACA requires that the update factor under certain payment systems be annually adjusted by changes in economy-wide productivity. The year that the productivity adjustment is effective varies by payment system. Specifically, section 3401 of the ACA requires that in CY 2011 (and in subsequent years) update factors under the ambulatory surgical center (ASC) payment system, the ambulance fee schedule (AFS), and the clinical laboratory fee schedule (CLFS) be adjusted by changes in economy-wide productivity. Section 3401(a) amends section 1886(b)(3)(B) of the Act to add clause (xi)(II) which sets forth the definition of this productivity adjustment. The statute defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period) (the “MFP adjustment”). Please see http://www.bls.gov/mfp for more information on MFP. This is the link to the Bureau of Labor Statistics (BLS) historical published data on the measure of MFP.

The projection of MFP will be produced by an economic forecasting firm, currently HIS Global Insight (IGI). In order to generate a forecast of MFP, IGI would replicate the MFP measure calculated by the BLS using a series of proxy variables derived from the IGI US Macro-economic models. These models take into account a very broad range of factors that influence the total US economy. IGI forecasts the underlying proxy components such as Gross Domestic Product (GDP), capital, and labor inputs required to estimate MFP, and will combine those projections according to the BLS methodology. For more information on the BLS measure of MFP, including technical notes, visit: http://www.bls.gov/mfp/. Table 34 lists the MFP component series employed by the BLS and the corresponding concepts estimated by IGI.

Table 34—Multifactor Productivity Component Series Employed by the Bureau of Labor Statistics and HIS Global Insight Back to Top
BLS Series IGI Series
Real value-added output, constant 2000 dollars Real gross non-farm value added output, chained 2005 dollar billions.
Private non-farm business sector labor input; 2000=100.00 Hours of all persons-private nonfarm business sector; 1992=1.0.
Aggregate capital inputs; 2000=100.00 Real effective capital stock used for full employment GDP, chained 2005 dollar billions.

To identify the appropriate proxy variables, IGI compared the historical growth rates of the BLS and IGI components listed above and found they were consistent across all series and therefore suitable proxies for calculating MFP. IGI would use the growth rates of the forecasted IGI concepts to project BLS' components of MFP, and derive the MFP adjustment that would be used under section 3401 to adjust the updates for the ASC payment system, the AFS, and the CLFS.

As discussed below, for each of these payment systems, the update factor is the percentage increase (or percentage decrease for the CLFS) in the consumer price index for all urban consumers (CPI-U) (referred to as the “CPI-U update factor”).

The statute for all three payment systems generally states that the Secretary shall reduce the CPI-U adjustment by the MFP adjustment. In order to calculate the MFP-adjusted updates to these payment systems, the MFP percentage adjustment would be subtracted from the CPI-U update factor (for the most recent 12-month period beginning with July 1 of the previous year and ending with June 30 of the current year). For example, if the update factor (CPI-U) is 4.0 percent, and the projected MFP is 1.3 percent, the MFP-Adjusted update factor (or MFP-Adjusted CPI-U for these payment systems) would be a 2.7 percent increase.

The period on which the CPI-U is calculated is for the most recent 12-month period beginning with July 1 of the previous year and ending with June 30 of the current year, and we propose that the end of the 10-year moving average of changes in the MFP should coincide with the end of this CPI-U timeframe. Since the CPI-U update factor is reduced by the MFP adjustment to determine the annual update for these payment systems, we believe it is appropriate for the numbers associated with both parts of the calculation to be projected as of the same end date (in this case, the end date of the time frame for both estimates would be June 30th of the year preceding the update year itself). In this way, changes in market conditions are aligned. We will round the final annual adjustment to the one-tenth of one percentage point level up or down as applicable according to conventional rounding rules (that is, if the number we are rounding is followed by 5, 6, 7, 8, or 9, we will round the number up; if the number we are rounding is followed by 0, 1, 2, 3, or 4, we will round the number down).

Below, we provide more information on the statutory requirements and proposals for each of the three payment systems. The statutory requirements for the ASC payment system will also be addressed in the CY 2011 OPPS/ASC proposed rule. We note that, in this proposed rule, we are describing the legislative provision and outlining the methodology we propose to use to calculate and apply the MFP adjustment to determine the annual updates for ASCs, the AFS, and the CLFS for CY 2011 and each subsequent year. We will set forth the final MFP adjustment for CY 2011 in the CY 2011 PFS final rule. Once we finalize the methodology for determining and applying the MFP adjustment to the CPI-U update factors for these payment systems, for subsequent calendar years, as we have done in the past, we intend to notify the general public of the annual update to the AFS and CLFS via CMS instruction and on the CMS Web site. These notifications would set forth both the CPI-U percentage increase or decrease and the MFP adjustment for the applicable year. For ASCs, for subsequent calendar years, as we have done in the past, we would continue to notify the general public of the annual update to the ASC payment amount via OPPS/ASC rulemaking.

We welcome comments on these proposals.

a. Ambulatory Surgical Centers (ASCs)

Section 1833(i)(2)(C) of the Act requires that, if the Secretary has not updated the ASC payment amounts in a calendar year, the payment amounts shall be increased by the percentage increase in the CPI-U as estimated by the Secretary for the 12-month period ending with the midpoint of the year involved. Because the Secretary does update the ASC payment amounts annually, we adopted a policy, which we codified at § 416.171(a)(2)(ii), to update the ASC conversion factor using the CPI-U for CY 2010 and subsequent calendar years. Therefore, the annual update to the ASC payment system is the CPI-U (referred to as the CPI-U update factor). Section 3401(k) of the ACA amends section 1833(i)(2)(D) of the Act by adding a new clause (v) which requires that “any annual update under [the ASC payment] system for the year * * * shall be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II)” (which we refer to as the MFP adjustment) effective with the calendar year beginning January 1, 2011. Section 3401(k) of the ACA states that application of the MFP adjustment to the ASC payment system may result in the update to the ASC payment system being less than zero for a year and may result in payment rates under the ASC payment system for a year being less than such payment rates for the preceding year.

In accordance with section 1833(i)(2)(C)(i) of the Act, before applying the MFP adjustment, the Secretary first determines the “percentage increase” in the CPI-U, which we interpret cannot be a negative number. Thus, in the instance where the percentage change in the CPI-U for a year is negative, we propose to hold the CPI-U update factor for the ASC payment system to zero. Section 1833(i)(2)(D)(v) of the Act, as added by section 3401(k) of the ACA, then requires that the Secretary reduce the CPI-U update factor (which would be held to zero if the CPI-U percentage change is negative) by the MFP adjustment, and states that application of the MFP adjustment may reduce this percentage change below zero. If the application of the MFP adjustment to the CPI-U percentage increase would result in a MFP-adjusted CPI-U update factor that is less than zero, then the annual update to the ASC payment rates would be negative and payments would decrease relative to the prior year.

Table 35 provides illustrative examples of how the MFP would be applied to the ASC payment system. These examples show the implication of a positive CPI-U update factor with a smaller MFP, a positive CPI-U update factor with a large MFP, and a CPI-U update factor of 0. We discuss the application of the MFP to the CPI-U update factor for the ASC payment system under the OPPS/ASC CY 2001 proposed rule (1504-P), which will be published around the same time as this proposed rule. Comments on the specific mathematical calculation of the MFP should be made to this PFS proposed rule. Comments on the application of the MFP to the CPI-U update factor under the ASC payment system should be made to the OPPS/ASC CY 2011 proposed rule (1504-P).

Table 35—Multifactor Productivity Adjusted Payment Update: Illustrative Example Back to Top
CPI-U (percent) MFP (percent) MFP-Adjusted CPI-U update factor (percent)
4.0 1.3 2.7
4.0 4.7 −0.7
0.0 0.2 −0.2

b. Ambulance Fee Schedule (AFS)

In accordance with section 1834(l)(3)(B) of the Act, the AFS is required to be increased each year by the percentage increase in the CPI-U (U.S. city average) for the 12-month period ending with June of the previous year. We refer to this update as the Ambulance Inflation Factor (AIF). Section 3401(j) of the ACA amends section 1834(l)(3) of the Act to add a new subparagraph (C) which states that, for CY 2011 and each subsequent year, after determining the percentage increase under section 1834(l)(3)(B) (that is, the CPI-U percentage increase, or AIF), the Secretary shall reduce such percentage increase by the MFP adjustment described in section 1886(b)(3)(B)(xi)(II) (as discussed above). Section 3401(j) further amends section 1834(l)(3) to state that the application of subparagraph (C) (that is, the reduction of the CPI-U percentage increase by the MFP adjustment) may result in that percentage increase being less than zero for a year, and may result in payment rates for a year being less than such payment rates for the preceding year.

In accordance with section 1834(l)(3) of the Act as amended by section 3401(j) of the ACA, before applying the MFP adjustment, the Secretary first determines the “percentage increase” in the CPI-U, which we interpret cannot be a negative number. Thus, in the instance where the percentage change in the CPI-U for a year is negative, we propose to hold the AIF to zero. The statute then requires that the Secretary reduce the CPI-U percentage increase (which would be held to zero if the CPI-U percentage change is negative) by the MFP adjustment, and states that application of the MFP adjustment may reduce this percentage increase below zero. If the application of the MFP adjustment to the CPI-U percentage increase would result in an MFP-adjusted AIF that is less than zero, then the annual update to the AFS would be negative and payments would decrease relative to the prior year.

Table 36 provides illustrative examples of how the MFP would be applied to the AFS. Finally, we propose to revise § 414.610(f) to require that the AIF be reduced by the MFP adjustment as required by the statute in determining the annual update under the ambulance fee schedule for CY 2011 and each subsequent year, and to revise § 414.620 to state that changes in payment rates resulting from the incorporation of the AIF and the MFP adjustment will be announced by CMS by instruction and on the CMS Web site, as we discussed above.

Table 36—Examples of the Application of the Multifactor Productivity Adjustment to the Ambulance Fee Schedule Back to Top
A B C D
CPI-UA AIF MFP Final update rounded
2.0% 2.0% 1.3% 0.7%
0.0% 0.0% 1.3% −1.3%
−2.0% 0.0% 1.3% −1.3%
1.0% 1.0% 1.3% −0.3%

c. Clinical Laboratory Fee Schedule

Section 1833(h)(2)(A)(i) of the Act, as amended by section 3401(l) of the ACA, requires the Secretary to annually adjust the CLFS “by a percentage increase or decrease equal to the percentage increase or decrease in the Consumer Price Index for All Urban Consumers (United States city average minus, for each of the years 2009 through 2010, 0.5 percentage points.” Therefore, the adjustment to the fee schedule can be an increase or a decrease.

Section 3401(l) of the ACA also adds new clause (iv) that applies in CY 2011 and each subsequent year. This clause requires the Secretary to reduce the adjustment in clause (i): (1) By the MFP adjustment described in section 1886(b)(3)(B)(xi)(II) for 2011 and each subsequent year and (2) by 1.75 percentage points for each of 2011 through 2015 (the “percentage adjustment”). However, section 3401(l) of the ACA states that the MFP adjustment will not apply in a year where the adjustment to the fee schedule determined under clause (i) is zero or a percentage decrease for a year. Further, the application of the MFP adjustment may not result in an adjustment to the fee schedule under clause (i) of less than zero for a year.

Therefore, we are proposing to apply the MFP adjustment as follows:

  • If the CPI-U update factor is positive, it would be reduced by the MFP. However, if application of the MFP would result in a negative update, the update would be held to zero.
  • If the CPI-U update factor is zero or negative, the MFP adjustment would not be applied.

Section 3401(l) of the ACA also states that the application of the percentage adjustment may result in an adjustment to the fee schedule under clause (i) being less than zero for a year and may result in payment rates for a year being less than such payment rates for the preceding year. Therefore, we are proposing to apply the percentage reduction of 1.75 percentage points to any adjustment to the fee schedule under the CLFS as directed by Section 3401(l) of the ACA.

Table 37 provides illustrative examples of how these adjustments would be applied to fees under the CLFS.

Table 37—Examples of the Application of the Multifactor Productivity Adjustment to the Clinical Lab Fee Schedule Back to Top
CPI-U MFP Productivity adjusted update (−1.75%) Percentage point reduction Resultant change to CLFS
Greater of 0.0% or (Col.A)−(Col.B) Col.C−Col.D
A B C D E
2.0% 1.3% 0.7% −1.75% −1.05%
0.0% N/A 0.0% −1.75% −1.75%
−2.0% N/A 0.0% −1.75% −1.75%

d. DMEPOS Fee Schedule

Sections 1834(a)(14), 1834(h)(4), and 1842(s)(1) of the Act mandate annual updates to the fee schedule amounts established in accordance with these respective sections for covered items of durable medical equipment defined in section 1834(a)(13) of the Act, prosthetic devices, orthotics, and prosthetics defined in section 1834(h)(4)(B) and (C) of the Act, and parenteral and enteral nutrients, equipment, and supplies described in section 1842(s)(2)(D) of the Act. The annual updates for 2011 for these sections are based on the percentage increase in the CPI-U for the 12-month period ending with June 2010. The annual updates for years subsequent to 2011 are based on the percentage increase in the CPI-U for the 12-month period ending with June of the previous year (that is, June 2011 for 2012, June 2011 for 2013, etc.). Since 1990 for durable medical equipment, prosthetic devices, orthotics, and prosthetics and 2003 for parenteral and enteral nutrients, equipment, and supplies, these annual fee schedule updates have been implemented on an annual basis through program instructions.

Section 3401(m) of the ACA amends section 1834(a)(14) of the Act to add a new subparagraph (L) which provides that, for CY 2011 and each subsequent year, the fee schedule update factor based on the CPI-U for the 12-month period ending with June of the previous year is to be reduced by the MFP adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act (as discussed above). Section 3401(m) of the ACA further amends section 1834(a)(14) of the Act to state that the application of subparagraph (L) (that is, the reduction of the CPI-U percentage increase by the MFP adjustment) may result in that percentage increase being less than zero for a year, and may result in payment rates for a year being less than such payment rates for the preceding year.

Section 3401(n) of ACA amends section 1834(h)(4)(A) of the Act to add a new clause (xi) which provides that, for CY 2011 and each subsequent year, the fee schedule update factor based on the CPI-U for the 12-month period ending with June of the previous year is to be reduced by the MFP adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act (as discussed above). Section 3401(n) of the ACA further amends section 1834(h)(4) of the Act to state that the application of subparagraph (A)(xi) (that is, the reduction of the CPI-U percentage increase by the MFP adjustment) may result in that percentage increase being less than zero for a year, and may result in payment rates for a year being less than such payment rates for the preceding year.

Section 3401(o) of ACA amends section 1842(s)(1) of the Act to add a new subparagraph (B) and clause (ii) which provides that, for CY 2011 and each subsequent year, the fee schedule update factor based on the CPI-U for the 12-month period ending with June of the previous year is to be reduced by the MFP adjustment described in section 1886(b)(3)(B)(xi)(II) (as discussed above). Section 3401(o) further amends section 1842(s)(1) to state that the application of subparagraph (B)(ii) (that is, the reduction of the CPI-U percentage increase by the MFP adjustment) may result in that percentage increase being less than zero for a year, and may result in payment rates for a year being less than such payment rates for the preceding year.

The MFP adjustments to the CPI-U percentage increases used in calculating the fee schedule adjustment factors for these DMEPOS items and services as mandated by sections 3401(m), (n), and (o) of ACA are simple mathematical calculations and are ministerial in nature. Therefore, we plan to implement these adjustments for 2011 and subsequent years as part of the annual program instructions related to the DMEPOS fees schedule updates.

Q. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a Personalized Prevention Plan

1. Background

a. Medicare Coverage of Preventive Physical Examinations and Routine Checkups

Section 1862(a)(7) of the Act explicitly prohibits Medicare payment for routine physical checkups with certain exceptions. One exception is for the Initial Preventive Physical Exam (also referred to as the “Welcome to Medicare” exam) established for new beneficiaries effective for services furnished on or after January 1, 2005. Section 4103 of the ACA has provided another exception to section 1862(a)(7). Congress has expanded Medicare coverage under part B to include an Annual Wellness Visit Providing Personalized Prevention Plan Services (hereinafter referred to as the annual wellness visit) in sections 1861(s)(2)(FF) and 1861(hhh) of the Act. This expanded benefit will be effective on January 1, 2011. Preventive care has become an increasing focus of the Medicare program. For instance, section 101 of the MIPPA expanded Medicare's authority to establish coverage for preventive services that meet specified criteria. Among other things, the annual wellness visit will encourage beneficiaries to obtain the preventive services already covered by Medicare, and that are appropriate for each individual beneficiary.

b. Requirements for Coverage of an Annual Wellness Visit

Section 4103 of the ACA provides for coverage of an annual wellness visit, which includes and/or takes into account a health risk assessment (HRA), and creates a personalized prevention plan for beneficiaries, subject to certain eligibility and other limitations. Section 4103 of the ACA also requires the identification of elements that must be provided to a beneficiary as part of the first visit for personalized prevention plan services and requires the establishment of a yearly schedule for appropriate provision of such elements thereafter.

The Affordable Care Act specifies elements that may be included in a personalized prevention plan, including establishment of, or update to, the individual's medical and family history, a list of the individual's current providers and suppliers and medications prescribed for the individual; measurement of height, weight, body-mass index (BMI) or waist circumference, and blood pressure; detection of any cognitive impairment; establishment or update of an appropriate screening schedule for the next 5 to 10 years; establishment or update of a list of risk factors and conditions (including any mental health conditions) for which interventions are recommended or underway; and furnishing of personalized health advice and referral, as appropriate, to health education or preventive counseling services or programs. The Affordable Care Act also permits the Secretary to add other elements to the annual wellness visit determined to be appropriate.

2. Proposed Revisions

a. Proposed Revisions to § 411.15, Particular Services Excluded From Coverage

To conform the regulations to the statutory requirements of the ACA, we are proposing to revise § 411.15 by specifying an exception to the routine physical checkups exclusion from coverage in § 411.15(a)(1) and modifying § 411.15(k)(15). We would add a provision to permit coverage of annual wellness visits that meet the eligibility limitation and the conditions for coverage we are specifying in § 410.15 (Annual Wellness Visit Providing Personalized Prevention Plan Services). Coverage of the annual wellness visit is furnished under Medicare Part B only. As provided in the statute, this new coverage allows payment for an annual wellness visit if provided after January 1, 2011 for an individual who is no longer within 12 months after the effective date of his or her first Medicare Part B coverage period, and has not received either an IPPE or an annual wellness visit within the past 12 months.

b. Proposed Revisions to Part 410, Subpart B—Medical and Other Health Services

We propose to add § 410.15(a), Condition for Coverage of Annual Wellness Visits Providing Personalized Prevention Plan Services, and § 410.15(b), Limitation on Coverage of Annual Wellness Visits Providing Personalized Prevention Plan Services, to codify the coverage of the annual wellness visit providing personalized prevention plan services.

We are proposing to define several terms in § 410.15. These include the following terms: (1) Detection of any cognitive impairment; (2) Review of the individual's functional ability and level of safety; (3) Health professional; (4) Establishment of, or update to the individual's medical and family history; (5) Eligible beneficiary; (6) First annual wellness visit providing personalized prevention plan services; and (7) Subsequent annual wellness visit providing personalized prevention plan services.

Further, the ACA allows the addition of any other element determined appropriate by the Secretary for inclusion in an annual wellness visit. We reviewed the relevant medical literature, current clinical practice guidelines, and the recommendations of the United States Preventive Services Task Force (USPSTF). Pursuant to that review, we propose to add depression screening and functional status screening as elements of the first annual wellness visit only. In their December 2009 Recommendation Statement, the U.S. Preventive Services Task Force (USPSTF) recommends screening adults for depression when staff-assisted depression care supports are in place to assure accurate diagnosis, effective treatment and follow-up (Grade: B recommendation). That is, the USPSTF recommends the service; and there is high certainty that the net benefit is moderate or there is moderate certainty that the net benefit is moderate to substantial.

The USPSTF is currently updating its 1996 recommendation regarding screening for hearing impairment in older adults as well as its recommendation on falls in the elderly. Until those recommendations can be published, functional status screening (including assessment of hearing impairment, ability to successfully perform activities of daily living, fall risk and home safety) appears supportable by evidence only for the first annual wellness visit.

We also are proposing that the definition of the term “Establishment of, or an update to the individual's medical and family history” include more than a list of all of an individual's prescribed medications as provided in the statute, but also supplements such as vitamins and calcium that an individual may use or be exposed to. Supplements such as these are commonly used by many beneficiaries and the medical literature supports that their use be closely monitored by health professionals because they can interact with prescribed medications and may result in unintended medical problems in individual cases. The statute expressly permits the Secretary to add other elements such as this to the annual wellness visits.

(1) Definitions

We are proposing to add the following definitions to § 410.15:

  • Detection of any cognitive impairment, for purposes of this section, means assessment of an individual's cognitive function by direct observation, with due consideration of information obtained by way of patient report, concerns raised by family members, friends, caretakers, or others.
  • Review of the individual's functional ability and level of safety, for purposes of this section includes, at a minimum, assessment of the following topics:

++ Hearing impairment;

++ Ability to successfully perform activities of daily living;

++ Fall risk;

++ Home safety.

  • Health professional, for purposes of this section means:

++ A physician who is a doctor of medicine or osteopathy (as defined in section 1861(r)(1) of the Act); or

++ A practitioner as described in clause (i) of section 1842(b)(18)(C) of the Act, that is, a physician assistant, nurse practitioner, or clinical nurse specialist (as defined in section 1861(aa)(5) of the Social Security Act); or

++ A medical professional (including a health educator, registered dietitian, or nutritionist) or a team of medical professionals, who are working under the supervision of a physician as defined in this definition.

  • Establishment of, or an update to the individual's medical and family history, for purposes of this section, means at a minimum the collection and documentation of the following:

++ Past medical and surgical history, including experiences with illnesses, hospital stays, operations, allergies, injuries, and treatments.

++ Use or exposure to medications and supplements, including calcium and vitamins.

++ Medical events experienced by the beneficiary's parents and any siblings and children, including diseases that may be hereditary or place the individual at increased risk.

  • Eligible beneficiary, for purposes of this section, means an individual who is no longer within 12 months after the effective date of his or her first Medicare Part B coverage period, and has not received either an initial preventive physical examination or an annual wellness visit providing a personalized prevention plan within the past 12 months.

(2) Requirements of the First Visit for Personalized Prevention Plan Services

We are proposing that the first annual wellness visit for purposes of this benefit include the following:

  • Establishment of the individual's medical and family history;
  • Establishment of a list of current providers and suppliers that are regularly involved in providing medical care to the individual;
  • Measurement of the individual's height, weight, body mass index (or waist circumference, if appropriate), blood pressure, and other routine measurements as deemed appropriate, based on the individual's medical and family history;
  • Detection of any cognitive impairment that the individual may have;
  • Review of the individual's potential (risk factors) for depression, including current or past experiences with depression or other mood disorders, based on the use of an appropriate screening instrument for persons without a current diagnosis of depression, which the health professional as defined in this section may select from various available screening questions or standardized questionnaires designed for this purpose and recognized by national professional medical organizations;
  • Review of the individual's functional ability and level of safety, based on direct observation or the use of appropriate screening questions or a screening questionnaire, which the health professional as defined in this section may select from various available screening questions or standardized questionnaires designed for this purpose and recognized by national professional medical organizations;
  • Establishment of the following:

++ A written screening schedule, such as a checklist, for the next 5 to 10 years as appropriate, based on recommendations of the USPSTF and the Advisory Committee on Immunization Practices, and the individual's health status, screening history, and age-appropriate preventive services covered by Medicare; and

++ A list of risk factors and conditions for which primary, secondary or tertiary interventions are recommended or are underway, including any mental health conditions or any such risk factors or conditions that have been identified through an initial preventive physical examination (as described under § 410.16), and a list of treatment options and their associated risks and benefits;

  • Furnishing of personalized health advice and a referral, as appropriate, to health education or preventive counseling services or programs aimed at reducing identified risk factors and improving self management, or community-based lifestyle interventions to reduce health risks and promote self-management and wellness, including weight loss, physical activity, smoking cessation, fall prevention, and nutrition; and
  • Any other element determined appropriate by the Secretary through the National Coverage Determination process.

(3) Requirements of Subsequent Visits for Personalized Prevention Plan Services

We are proposing that subsequent annual wellness visits providing personalized prevention plan services for purposes of this benefit include the following:

  • An update of the individual's medical and family history;
  • An update of the list of current providers and suppliers that are regularly involved in providing medical care to the individual, as that list was developed for the first annual wellness visit providing personalized prevention plan services;
  • Measurement of an individual's weight, blood pressure, and other routine measurements as deemed appropriate, based on the individual's medical and family history;
  • Detection of any cognitive impairment, as that term is defined in this section, that the individual may have;
  • An update to the following:

++ The written screening schedule for the individual as that schedule was developed at the first annual wellness visit providing personalized prevention plan services; and

++ The list of risk factors and conditions for which primary, secondary or tertiary interventions are recommended or are underway for the individual as that list was developed at the first annual wellness visit providing personalized prevention plan services;

  • Furnishing of personalized health advice to the individual and a referral, as appropriate, to health education or preventive counseling services or programs as that advice and related services are defined in paragraph (a) of this section;
  • Any other element determined appropriate by the Secretary through the National Coverage Determination process. Body-mass index (BMI) should be calculated at the first annual wellness visit and may be recalculated at subsequent visits, if indicated. Given the general stability of adult height, we would not expect the BMI to meaningfully change in the absence of significant weight change. We have not in the definition of the subsequent annual visit required measurement of the individual's height.

We are proposing to add two distinct elements to the definition of the first annual wellness visit only: depression screening and functional status assessment. Our review of the medical literature and the USPSTF recommendations indicates that the optimum frequency for those services is unknown. Thus we believe it would be premature and beyond the current evidence to require that they be included in the definition of subsequent visits, but they may be performed at these visits, if indicated.

In addition, to facilitate future consideration of coverage of additional elements in the definitions of the first and subsequent annual wellness visits in § 410.15(a), we are proposing that the determination of other required elements for those purposes will be made through the National Coverage Determination (NCD) process. The NCD process is evidence based, transparent and furnishes the opportunity for public comment, and is described in sections 1862(l) of the Act.

While section 4103 of the ACA ultimately requires that an HRA be included in the new annual wellness visit benefit beginning January 1, 2011, the HRA guidelines (with standards for interactive telephonic and web-based HRAs) and the model HRA tool also required by section 4103 are not yet available. As a result, we have not included requirements related to the HRA in this proposed rule. When HRA guidelines and standards have been established, and a model HRA instrument is available and determined by the Secretary to be appropriate for the Medicare population, we will revise these regulations to include the HRA as an element in the definition of the annual wellness visit.

We are requesting public comments on the components of both the first and subsequent annual wellness visits, as well as the definitions of related terms in the document. We ask that commenters making specific recommendations on this or any related issue provide documentation from the medical literature, current clinical practice guidelines, or the USPSTF or Advisory Committee on Immunization Practices recommendations.

3. Payment for the Annual Wellness Visit Providing Personalized Prevention Plan Services (PPPS)

Section 4103 of the ACA created a new benefit for the “annual wellness visit” with personalized prevention plan services. The Affordable Care Act amends section 1861(s)(2) of the Act by adding a new subsection (FF) to provide for coverage of the annual wellness visit beginning January 1, 2011. Section 4103 also adds new subsection (hhh) to section 1861 of the Act to define “personalized prevention plan services” and to specify who may furnish these services. Finally, section 4103 amends section 1848(j)(3) of the Act to provide for payment of annual wellness visits under the PFS, and specifically excludes the annual wellness visit from the hospital outpatient prospective payment system (OPPS). Therefore, a single payment under the PFS will be made when an annual wellness visit is furnished by a physician, physician assistant, nurse practitioner, or clinical nurse specialist, or by a medical professional or team of medical professionals, as determined appropriate by the Secretary, under the supervision of a physician.

To allow for Medicare reporting and payment of the annual wellness visit, we are proposing to create two new HCPCS G-codes for reporting the first wellness visit and creation of the PPPS and the subsequent visits available to the beneficiary every 12 months. Specifically, we are proposing to establish the following two new HCPCS codes for CY 2011: GXXXA (Annual wellness visit; includes a personalized prevention plan of service (PPPS), first visit) and GXXXB (Annual wellness visit; includes a personalized prevention plan of service (PPPS), subsequent visit). A beneficiary's first annual wellness visit to a practitioner would be reported to Medicare under HCPCS code GXXXA, even if the beneficiary had previously received an initial preventive physical examination (IPPE) that was covered by Medicare. Beneficiaries, in their first 12 months of Part B coverage, will continue to be eligible only for an IPPE. After the first 12 months of Part B coverage, on and after January 1, 2011, beneficiaries will be eligible for an annual wellness visit described by HCPCS code GXXXA or GXXXB, provided that the beneficiary has not received an IPPE or annual wellness visit within the preceding 12-month period.

A beneficiary would be eligible for one initial annual wellness visit covered by Medicare that must include all of the required elements that we are proposing for the first visit as described in the preceding section. All other annual wellness visits that would include the required elements for those visits would be reported as subsequent visits, even if a different practitioner furnished the subsequent annual wellness visit. We would expect there to be continuity and communication among the practitioners caring for beneficiaries over time with respect to the PPPS, and that would include the case where a different practitioner furnishing a subsequent annual wellness visit would update the information in the patient's medical record based on the patient's interval history since the previous annual wellness visit.

The first wellness visit described by HCPCS code GXXXA is similar to the IPPE that is currently reported with HCPCS code G0402 (Initial preventive physical examination; face-to-face visit, services limited to new beneficiary during the first 12 months of Medicare enrollment). We believe that the physician work and nonfacility PE of the IPPE and the first annual wellness visit are very similar, given that both represent an initial beneficiary visit focused on prevention. In the CY 2010 PFS final rule with comment period discussion of payment for the IPPE (74 FR 61767), we noted that in the context of physician work and intensity, HCPCS code G0402 was most equivalent to CPT code 99204 (Level 4 new patient office or other outpatient visit). Therefore, for CY 2011, we are proposing to crosswalk the same physician work RVUs of 2.43 from CPT code 99204 to HCPCS codes G0402 and GXXXA. Similarly, we believe the direct PE inputs for all of these services are similar and, therefore, we are proposing to assign the same direct PE inputs to HCPCS codes G0402 and GXXXA as are included for CPT code 99204. We note that currently, the direct PE inputs for HCPCS code G0402 also include preventive assessment forms, and we are proposing to add this supply to the PE for HCPCS code GXXXA as well because we believe it would be used in the first wellness visit. The proposed CY 2011 PE and malpractice RVUs for HCPCS code GXXXA are displayed in Addendum B to this proposed rule. We also note that we are proposing no facility PE RVUs for HCPCS code GXXXA because only a single payment will be made under the PFS when this service is furnished. There is no separate facility payment for GXXXA when a practitioner furnishes this service in the facility setting.

Moreover, we believe that a subsequent annual wellness visit described by HCPCS code GXXXB is most similar, from the perspectives of physician work and PE, to CPT code 99214 (Level 4 established patient office or other outpatient visit). The subsequent annual wellness visit is a patient visit for PPPS that includes certain required elements, such as updating information regarding the patient's history, risk factors, and regular medical care providers and suppliers since the prior annual visit, and obtaining routine measurements. We believe the physician work and direct PE of a subsequent annual wellness visit are similar, in terms of evaluation and management (E/M) visit level, to the first wellness visit, which we are proposing to value like a level 4 new patient office or other outpatient visit, as we have previously valued the IPPE. However, the subsequent annual wellness visit would typically be for an established patient and, as described earlier in this section, we are proposing that certain wellness visit elements only must be furnished in the first wellness visit. As a result, we believe it would be most appropriate to value the subsequent annual wellness visit based upon an E/M visit for an established patient. Therefore, for CY 2011 we are proposing to crosswalk the same physician work RVUs of 1.50 from CPT code 99214 to HCPCS code GXXXB. Furthermore, we believe the direct PE inputs for these two services are also similar and, therefore, we are proposing to assign the same direct PE inputs to HCPCS code GXXXB as are assigned to CPT code 99214. We note that we are also proposing to add the same preventive assessment forms to the PE for HCPCS code GXXXB as we are proposing to add for HCPCS code GXXXA because we believe this supply would be used in both the first and subsequent annual wellness visits. The proposed CY 2011 PE and malpractice RVUs for HCPCS code GXXXB are displayed in Addendum B to this proposed rule. Similar to our treatment of HCPCS code GXXXA for the first wellness visit, we are proposing no facility PE RVUs for HCPCS code GXXXB as only a single payment will be made under the PFS when this service is furnished. There is no separate facility payment for GXXXB when a practitioner furnishes this service in the facility setting.

While we believe there could be overlap in the direct PE, malpractice expense, and physician work in both history taking and examination of the patient in the context of the initial or subsequent wellness visit and another E/M service, we are not proposing to limit the level of a medically necessary E/M visit when furnished and billed with a wellness visit. As we stated in the CY 2005 PFS final rule with comment period with respect to the IPPE (69 FR 66289 through 66290), we do not want to prohibit the reporting of an appropriate level of service when it is necessary to evaluate and treat the beneficiary for acute and chronic conditions. However, at the same time, we believe the practitioner is better able to discuss health promotion, disease prevention, and the educational opportunities available with beneficiaries when their health status has been stabilized and the beneficiary is physically receptive. Therefore, depending on the clinical circumstances, a CPT code for a medically necessary E/M visit may be reported and appended with CPT modifier -25 (significant, separately identifiable evaluation and management service by the same physician on the same day of the procedure or other service) to designate the E/M visit as a separately identifiable service from the initial or subsequent wellness visit. However, we believe this scenario would be uncommon, and we expect that no components of an encounter attributable to the annual wellness visit would be used in determining the level of a separate E/M visit that would also be reported.

With respect to beneficiary cost-sharing, section 4103(c) of the ACA amends section 1833(a)(1) of the Act by adding subparagraph (X), referring to the PPPS to state that the amount paid shall be 100 percent of the lesser of the actual charge for the services or the amount determined under the payment basis determined under section 1848 of the Act, thereby eliminating coinsurance for the annual wellness visit. Finally, section 4103(b)(4) of the ACA amends section 1833(b) of the Act to specify that the Part B deductible does not apply to the annual wellness visit. We expect that practitioners will work to ensure that this valuable new Medicare benefit is furnished to the beneficiaries that they care for in their practices, effective January 1, 2011.

R. Section 4104: Removal of Barriers to Preventive Services in Medicare

1. Definition of “Preventive Services”

Section 4104 of the ACA revises section 1861(ddd) of the Act to add paragraph (3), which defines the term “preventive services” as follows:

  • The specific services currently listed in section 1861(ww)(2) of the Act with the explicit exclusion of electrocardiograms (as specified in section 1861(ww)(2)(M) of the Act);
  • The initial preventive physical examination (IPPE) established by section 611 of the MMA and defined in section 1861(ww)(1) of the Act; and
  • The annual wellness visit, as specified by section 1861(hhh) of the Act as added by section 4103 of the ACA. We refer readers to section V.Q. of this proposed rule for the proposed provisions related to the coverage of and payment for the annual wellness visit. The regulations regarding coverage of the IPPE are specified in § 410.16 and remain unchanged by the ACA.

The specific preventive services included in the definition of “preventive services” in section 1861(ddd)(3)(A) of the Act as cross-referenced to section 1861(ww)(2) of the Act, excluding electrocardiograms, include the following:

  • Pneumococcal, influenza, and hepatitis B vaccine and administration.
  • Screening mammography.
  • Screening pap smear and screening pelvic exam.
  • Prostate cancer screening tests.
  • Colorectal cancer screening tests.
  • Outpatient diabetes self-management training (DSMT).
  • Bone mass measurement.
  • Screening for glaucoma.
  • Medical nutrition therapy (MNT) services.
  • Cardiovascular screening blood tests.
  • Diabetes screening tests.
  • Ultrasound screening for abdominal aortic aneurysm (AAA).
  • Additional preventive services identified for coverage through the national coverage determination (NCD) process.

We note that currently the only additional preventive service identified for coverage through the NCD process is HIV testing. A proposed NCD for smoking cessation services for asymptomatic patients was released in May 2010 on the CMS Web site at: http://www.cms.gov/mcd/index_list.asp?list_type=nca. We will address the applicability of section 1861(ddd)(3)(A) of the Act (as added by section 4104 of the ACA) to these services if an NCD establishing them as additional preventive services is finalized.

We are proposing to add the definition of “preventive services” in § 410.2 to implement the provisions of section 1861(ddd)(3) of the Act (as amended by section 4104 of the ACA).

2. Deductible and Coinsurance for Preventive Services

Section 4104(b)(4) of the ACA amends section 1833(a)(1) of the Act by requiring 100 percent Medicare payment for the IPPE and for those preventive services recommended by the United States Preventive Services Task Force (USPSTF) with a grade of A or B for any indication or population and that are appropriate for the individual. This provision waives any coinsurance that would otherwise be applicable under section 1833(a)(1) of the Act for those items and services listed in section 1861(ww)(2) of the Act (excluding electrocardiograms) to which the USPSTF has given a grade of A or B. In addition, section 4103(c)(1) of the ACA amends section 1833(c)(1) of the Act to waive the coinsurance for the annual wellness visit. The coinsurance represents the beneficiary's share of the payment to the provider or supplier for furnished services. Coinsurance generally refers to a percentage (for example, 20 percent) of the Medicare payment rate for which the beneficiary is liable and is applicable under the PFS, while copayment generally refers to an established amount that the beneficiary must pay that is not necessarily related to a particular percentage of the Medicare payment, and is applicable under the hospital Outpatient Prospective Payment System (OPPS). We refer readers to the CY 2011 OPPS/ASC proposed rule for proposed provisions related to payment for preventive services, including waiver of the deductible and copayment, under the OPPS.

Section 4104(c) of the ACA amends section 1833(b)(1) of the Act to waive the Part B deductible for preventive services described in subparagraph (A) of section 1861(ddd)(3) of the Act that have a grade of A or B from the USPSTF. In addition, section 1833(b)(1) of the Act (as amended by section 4103(c)(4) of the ACA) waives the Part B deductible for the annual wellness visit. These provisions are effective for services furnished on and after January 1, 2011. Section 101(b)(2) of the MIPPA amended section 1833(b) of the Act to waive the deductible for the IPPE effective January 1, 2009.

Not all preventive services described in subparagraph (A) of section 1861(ddd)(3) are recommended by the USPSTF with a grade of A or B and, therefore, some of the preventive services do not meet the criteria in sections 1833(a)(1) and (b)(1) of the Act for the waiver of the deductible and coinsurance. However, with certain exceptions noted below, the changes made by section 4104 of the ACA do not affect most of the preexisting specific provisions in sections 1833(a) and 1833(b) of the Act (that are codified in regulations in § 410.160(b) and § 410.152) that waive the deductible and coinsurance for specific services. For example, section 1833(a)(1)(D) of the Act already waives the coinsurance and section 1833(b)(3) of the Act waives the deductible for clinical laboratory tests (including tests furnished for screening purposes). Section 4104 of the ACA does not change this provision and, therefore, the waiver of both the deductible and coinsurance remains in place for all laboratory tests, regardless of whether the particular clinical laboratory test meets the USPSTF grading criteria specified in sections 1833(a)(1) and 1833(b)(1) of the Act (as amended by section 4104 of the ACA) for waiver of the deductible and coinsurance as a preventive service.

The following preventive services listed in section 1833(ddd)(3)(A) of the Act are not recommended by the USPSTF with a grade of A or B for any indication or population: digital rectal examination furnished as a prostate cancer screening service; glaucoma screening; DSMT services; and barium enema furnished as a colorectal cancer screening service.

Specifically, HCPCS code G0102 (Prostate cancer screening; digital rectal exam), which does not have a grade of A or B from the USPSTF for any indication or population, will continue to be subject to the deductible and coinsurance as there is no statutory provision to the contrary. However, the deductible and coinsurance for HCPCS code G0103 (Prostate cancer screening; prostate specific antigen test (PSA)) will continue to be waived in accordance with section 1833(a)(1)(D) of the Act, even though this service also does not have a grade of A or B from the USPSTF.

Glaucoma screening services, described by HCPCS codes G0117 (Glaucoma screening for high risk patients furnished by an optometrist or ophthalmologist) and G0118 (Glaucoma screening for high risk patient furnished under the direct supervision of an optometrist or ophthalmologist), will continue to be subject to the deductible and coinsurance because these services are not recommended with a grade of A or B by the USPSTF for any indication or population and there is no other statutory provision to except them. Similarly, DSMT services are currently not rated by the USPSTF, and there is no other statutory provision to except them from applicability of the deductible and coinsurance. Therefore the deductible and coinsurance requirements will continue to apply.

Barium enemas furnished as colorectal cancer screening tests, described by HCPCS codes G0106 (Colorectal cancer screening; alternative to G0104, screening sigmoidoscopy, barium enema) and G0120 (Colorectal cancer screening; alternative to G0105, screening colonoscopy, barium enema), do not have a grade of A or B from the USPSTF for any indication or population. However, the deductible does not apply to barium enemas furnished as colorectal cancer screening tests, because colorectal cancer screening tests are explicitly excluded from the deductible in section 1833(b)(8) of the Act. However, there is no specific exclusion of barium enemas from the coinsurance requirement in section 1833(b)(1) of the Act and, therefore, this requirement, as applicable, continues to apply to barium enemas. We note that the USPSTF has given a grade of A to screening colonoscopy, screening flexible sigmoidoscopy, and fecal occult blood screening tests, and that, as a result, these colorectal cancer screening tests are subject to the statutory waiver of both the deductible and coinsurance.

We note also that the USPSTF ceased to make recommendations with regard to vaccines and vaccine administration after CY 1996, so as not to conflict with the recommendations of the Centers for Disease Control and Prevention's Advisory Committee on Immunization Practices. However, the USPSTF's most recent vaccine recommendations gave a grade of B to influenza and pneumococcal vaccines and their administration and a grade of A to hepatitis B vaccine and its administration. While sections 1833(a)(1) and 1833(b)(1) of the Act require that the preventive services receive a grade of A or B from the USPSTF for the coinsurance and deductible to be waived, the statute does not specify that the recommended grade must be furnished by the USPSTF within any given timeframe. The USPSTF grades for these preventive services are the most current USPSTF grade and have never been withdrawn. Therefore, we believe that these preventive services meet the requirements of the statute for the waiver of the deductible and coinsurance. We also note that the Centers for Disease Control and Prevention's Advisory Committee on Immunization Practices currently recommends influenza, pneumococcal, and hepatitis B vaccines.

We are proposing to update § 410.160(b), which lists the services for which expenses incurred are not subject to the Part B annual deductible and do not count toward meeting that deductible. Specifically, we are proposing to revise § 410.160(b)(2) to include influenza and hepatitis B vaccines and their administration, in addition to pneumococcal vaccine and its administration. In addition, in § 410.160(b), we are also proposing to add exceptions for bone mass measurement, MNT services, and the annual wellness visit.

In § 410.152, we are proposing to revise paragraph (l) to establish the amount of payment under the applicable payment system for providers and suppliers of the services listed in the paragraph and displayed in Table 38. Table 38 displays the HCPCS codes that we are proposing as “preventive services” under section 1861(ddd)(3)(A) of the Act and identifies the HCPCS codes for the IPPE and the annual wellness visit. Table 38 also indicates the most recent USPSTF grade, if any, that is the basis for our proposed policy with regard to waiver of the deductible and coinsurance, as applicable, and the Medicare payment system under which the HCPCS code would be paid when furnished outside of the facility setting. We note that the changes made by section 4104 of the ACA with respect to the deductible and coinsurance apply in all settings in which the services are furnished.

In developing recommendations regarding preventive services, we recognize that the USPSTF may make recommendations that are specific to an indication or population, at times including characteristics such as gender and age in its recommendations. While we are proposing to waive the deductible and coinsurance for any Medicare covered preventive service recommended with a grade of A or B for any indication or population, with no limits on the indication or population as long as the USPSTF has recommended the preventive service for at least one indication and/or population with a grade of A or B, we note that all existing Medicare coverage policies for such services, including any limitations based on indication or population, continue to apply. In some cases, national coverage policies may currently limit Medicare coverage based on the indication or population, consistent with the USPSTF recommendations with a grade of A or B for the indication or population. In other cases where Medicare does not explicitly noncover preventive services for a specific population or indication, we would expect that, particularly in those cases where the USPSTF recommendation grade is a D (that is, the USPSTF recommends against the service because there is moderate or high certainty that the service has no net benefit or that the harms outweigh the benefits), practitioners would only order those preventive services that are clinically appropriate for the beneficiary. If we have concerns in the future about the appropriateness of preventive services for an indication or population in light of the USPSTF's recommendations, we may consider using our authority under section 1834(n)(1) of the Act (as added by section 4105 of the ACA) to modify Medicare coverage of any preventive service to be consistent with the recommendations of the USPSTF.

Section 10501(i)(2) of the ACA amended the definition of Federally Qualified Health Center (FQHC) services as defined in section 1861(aa)(3)(A) of the Act by replacing the specific references to services provided under section 1861(qq) and (vv) of the Act (diabetes outpatient self-management training services and medical nutrition therapy services, respectively) with preventive services as defined in section 1861(ddd)(3) of the Act, as established by section 4014(a)(3) of the ACA. These changes are effective for services provided on or after January 1, 2011. Accordingly, we are proposing to conform the regulations to the new statutory requirement by adding a new section § 405.2449 which would add the new preventive services definition to the definition of FQHC services effective for services provided on or after January 1, 2011.

Section 1861(ddd)(3) of the Act defines “preventive services” as consisting of the following three components:

  • Screening and preventive services described in section 1861(ww)(2) of the Act (other than electrocardiograms described in subparagraph (M) of that same subsection).
  • An initial preventive physical examination, as defined in section 1861(ww) of the Act.
  • Personalized prevention plan services as defined in section 1861(hhh)(1) of the Act.

We are proposing to add each of these three components into the new Medicare FQHC preventive services definition in a new § 405.2449.

Section 4104(b)(1) of the ACA, as amended by section 10406 of the same Act, waives coinsurance for preventive services by adding section 1833(a)(1)(Y) to the Act to require, essentially, waiver of coinsurance for preventive services that are recommended with a grade of A or B by the USPSTF for any indication or population. This provision is specifically designed to remove barriers to affording and obtaining such preventive services under Medicare.

In addition, section 10501(i)(3)(B)(ii) of the ACA added section 1833(a)(1)(Z) to the Act to require a 20-percent copay on all FQHC services after implementation of the FQHC prospective payment system. We believe we can give both section 1833(a)(1)(Y) and (Z) of the Act, and the definition of FQHC services (revised to include the broader scope of preventive services) their best effect by permitting a 100 percent reimbursement rate for preventive services as defined at section 1861 (ddd)(3) of Act, effective January 1, 2011.

Section 1833(b)(4) of the Act stipulates that the Medicare Part B deductible shall not apply to Federally qualified health center services. The ACA makes no change to this provision, therefore Medicare shall continue to waive the Part B deductible for all federally qualified health center services, including preventive services added by the ACA.

Table 38—Proposed CY 2011 Deductible and Coinsurance for Preventive Services Under Section 1861( ddd (3)(A) of the Act (Includes the IPPE and the Annual Wellness Visit) Back to Top
Preventive service CPT/HCPCS Code Long descriptor USPSTF rating1 Payment method CY 2010 coins./deductible CY 2011 coins./deductible
1U.S. Preventive Services Task Force Recommendations.
A—The USPSTF strongly recommends that clinicians routinely provide [the service] to eligible patients. (The USPSTF found good evidence that [the service] improves important health outcomes and concludes that benefits substantially outweigh harms.)
B—The USPSTF recommends that clinicians routinely provide [the service] to eligible patients. (The USPSTF found at least fair evidence that [the service] improves important health outcomes and concludes that benefits outweigh harms.)
C—The USPSTF makes no recommendation for or against routine provision of [the service]. (The USPSTF found at least fair evidence that [the service] can improve health outcomes but concludes that the balance of benefits and harms is too close to justify a general recommendation.)
D—The USPSTF recommends against routinely providing [the service] to asymptomatic patients. (The USPSTF found at least fair evidence that [the service] is ineffective or that harms outweigh benefits.)
I—The USPSTF concludes that the evidence is insufficient to recommend for or against routinely providing [the service]. (Evidence that [the service] is effective is lacking, of poor quality, or conflicting and the balance of benefits and harms cannot be determined.)
Initial Preventive Physical Examination, IPPE G0402 Initial preventive physical examination; face to face visits, services limited to new beneficiary during the first 12 months of Medicare enrollment * Not Rated PFS Coins. applies and ded. is waived WAIVED.
G0403 Electrocardiogram, routine ECG with 12 leads; performed as a screening for the initial preventive physical examination with interpretation and report PFS Not Waived Not Waived.
G0404 Electrocardiogram, routine ECG with 12 leads; tracing only, without interpretation and report, performed as a screening for the initial preventive physical examination PFS Not Waived Not Waived.
G0405 Electrocardiogram, routine ECG with 12 leads; interpretation and report only, performed as a screening for the initial preventive physical examination PFS Not Waived Not Waived.
Ultrasound Screening for Abdominal Aortic Aneurysm (AAA) G0389 Ultrasound, B-scan and/or real time with image documentation; for abdominal aortic aneurysm (AAA) ultrasound screening B PFS Coins. applies and ded. is waived WAIVED.
Cardiovascular Disease Screening 80061 Lipid panel A CLFS WAIVED WAIVED.
82465 Cholesterol, serum or whole blood, total CLFS WAIVED WAIVED.
83718 Lipoprotein, direct measurement; high density cholesterol (hdl cholesterol) CLFS WAIVED WAIVED.
84478 Triglycerides CLFS WAIVED WAIVED.
Diabetes Screening Tests 82947 Glucose; quantitative, blood (except reagent strip) B CLFS WAIVED WAIVED.
82950 Glucose; post glucose dose (includes glucose) CLFS WAIVED WAIVED.
82951 Glucose; tolerance test (gtt), three specimens (includes glucose) * Not Rated CLFS WAIVED WAIVED.
Diabetes Self-Management Training Services (DSMT) G0108 Diabetes outpatient self-management training services, individual, per 30 minutes * Not Rated PFS Not Waived Not Waived.
G0109 Diabetes outpatient self-management training services, group session (2 or more), per 30 minutes PFS Not Waived Not Waived.
Medical Nutrition Therapy (MNT) Services 97802 Medical nutrition therapy; initial assessment and intervention, individual, face-to-face with the patient, each 15 minutes B PFS Not Waived WAIVED.
97803 Medical nutrition therapy; re-assessment and intervention, individual, face-to-face with the patient, each 15 minutes PFS Not Waived WAIVED.
97804 Medical nutrition therapy; group (2 or more individual(s)), each 30 minutes PFS Not Waived WAIVED.
G0270 Medical nutrition therapy; reassessment and subsequent intervention(s) following second referral in same year for change in diagnosis, medical condition or treatment regimen (including additional hours needed for renal disease), individual, face to face with the patient, each 15 minutes B PFS Not Waived WAIVED.
G0271 Medical nutrition therapy, reassessment and subsequent intervention(s) following second referral in same year for change in diagnosis, medical condition, or treatment regimen (including additional hours needed for renal disease), group (2 or more individuals), each 30 minutes PFS Not Waived WAIVED.
Screening Pap Test G0123 Screening cytopathology, cervical or vaginal (any reporting system), collected in preservative fluid, automated thin layer preparation, screening by cytotechnologist under physician supervision A CLFS WAIVED WAIVED.
G0124 Screening cytopathology, cervical or vaginal (any reporting system), collected in preservative fluid, automated thin layer preparation, requiring interpretation by physician PFS Coins. applies and ded. is waived WAIVED.
G0141 Screening cytopathology smears, cervical or vaginal, performed by automated system, with manual rescreening, requiring interpretation by physician A PFS Coins. applies and ded. is waived WAIVED.
G0143 Screening cytopathology, cervical or vaginal (any reporting system), collected in preservative fluid, automated thin layer preparation, with manual screening and rescreening by cytotechnologist under physician supervision A CLFS WAIVED WAIVED.
G0144 Screening cytopathology, cervical or vaginal (any reporting system), collected in preservative fluid, automated thin layer preparation, with screening by automated system, under physician supervision A CLFS WAIVED WAIVED.
G0145 Screening cytopathology, cervical or vaginal (any reporting system), collected in preservative fluid, automated thin layer preparation, with screening by automated system and manual rescreening under physician supervision A CLFS WAIVED WAIVED.
G0147 Screening cytopathology smears, cervical or vaginal, performed by automated system under physician supervision A CLFS WAIVED WAIVED.
G0148 Screening cytopathology smears, cervical or vaginal, performed by automated system with manual rescreening A CLFS WAIVED WAIVED.
P3000 Screening papanicolaou smear, cervical or vaginal, up to three smears, by technician under physician supervision CLFS WAIVED WAIVED.
P3001 Screening papanicolaou smear, cervical or vaginal, up to three smears, requiring interpretation by physician PFS Coins. applies & ded. is waived WAIVED.
Q0091 Screening papanicolaou smear; obtaining, preparing and conveyance of cervical or vaginal smear to laboratory PFS Coins. applies & ded. is waived WAIVED.
Screening Pelvic Exam G0101 Cervical or vaginal cancer screening; pelvic and clinical breast examination A PFS Coins. applies and ded. is waived WAIVED.
Screening Mammography 77052 Computer-aided detection (computer algorithm analysis of digital image data for lesion detection) with further physician review for interpretation, with or without digitization of film radiographic images; screening mammography (list separately in addition to code for primary procedure) B PFS Coins. applies and ded. is waived WAIVED.
77057 Screening mammography, bilateral (2-view film study of each breast) B PFS Coins. applies and ded. is waived WAIVED.
G0202 Screening mammography, producing direct digital image, bilateral, all views PFS Coins. applies & ded. is waived WAIVED.
Bone Mass Measurement G0130 Single energy x-ray absorptiometry (sexa) bone density study, one or more sites; appendicular skeleton (peripheral) (e.g., radius, wrist, heel) B PFS Not Waived WAIVED.
77078 Computed tomography, bone mineral density study, 1 or more sites; axial skeleton (e.g., hips, pelvis, spine) PFS Not Waived WAIVED.
77079 Computed tomography, bone mineral density study, 1 or more sites; appendicular skeleton (peripheral) (e.g., radius, wrist, heel) PFS Not Waived WAIVED.
77080 Dual-energy x-ray absorptiometry (dxa), bone density study, 1 or more sites; axial skeleton (e.g., hips, pelvis, spine) PFS Not Waived WAIVED.
77081 Dual-energy x-ray absorptiometry (dxa), bone density study, 1 or more sites; appendicular skeleton (peripheral) (e.g., radius, wrist, heel) PFS Not Waived WAIVED.
77083 Radiographic absorptiometry (e.g., photodensitometry, radiogrammetry), 1 or more sites PFS Not Waived WAIVED.
76977 Ultrasound bone density measurement and interpretation, peripheral site(s), any method B PFS Not Waived WAIVED.
Colorectal Cancer Screening G0104 Colorectal cancer screening; flexible sigmoidoscopy A PFS Coins. applies and ded. is waived WAIVED.
G0105 Colorectal cancer screening; colonoscopy on individual at high risk PFS Coins. applies and; ded. is waived WAIVED.
G0106 Colorectal cancer screening; alternative to G0104, screening sigmoidoscopy, barium enema * Not Rated PFS Coins. applies and ded. is waived Coins. applies and ded. is waived.
G0120 Colorectal cancer screening; alternative to G0105, screening colonoscopy, barium enema. PFS Coins. applies and ded. is waived Coins. applies and ded. is waived.
G0121 Colorectal cancer screening; colonoscopy on individual not meeting criteria for high risk A PFS Coins. applies and ded. is waived WAIVED.
82270 Blood, occult, by peroxidase activity (e.g., guaiac), qualitative; feces, consecutive CLFS WAIVED WAIVED.
G0328 Colorectal cancer screening; fecal occult blood test, immunoassay, 1-3 simultaneous CLFS Coins. applies and ded. is waived WAIVED.
Prostate Cancer Screening G0102 Prostate cancer screening; digital rectal examination D PFS Not Waived Not Waived.
G0103 Prostate cancer screening; prostate specific antigen test (PSA) CLFS WAIVED WAIVED.
Glaucoma Screening G0117 Glaucoma screening for high risk patients furnished by an optometrist or ophthalmologist I PFS Not Waived Not Waived.
G0118 Glaucoma screening for high risk patient furnished under the direct supervision of an optometrist or ophthalmologist PFS Not Waived Not Waived.
Influenza Virus Vaccine 90655 Influenza virus vaccine, split virus, preservative free, when administered to children 6-35 months of age, for intramuscular use B Drug Pricing File WAIVED WAIVED.
90656 Influenza virus vaccine, split virus, preservative free, when administered to individuals 3 years and older, for intramuscular use Drug Pricing File WAIVED WAIVED.
90657 Influenza virus vaccine, split virus, when administered to children 6-35 months of age, for intramuscular use Drug Pricing File WAIVED WAIVED.
90658 Influenza virus vaccine, split virus, when administered to individuals 3 years of age and older, for intramuscular use Drug Pricing File WAIVED WAIVED.
90660 Influenza virus vaccine, live, for intranasal use Drug Pricing File WAIVED WAIVED.
90662 Influenza virus vaccine, split virus, preservative free, enhanced immunogenicity via increased antigen content, for intramuscular use Drug Pricing File WAIVED WAIVED.
G0008 Administration of influenza virus vaccine PFS WAIVED WAIVED.
G9141 Influenza A (H1N1) immunization administration (includes the physician counseling the patient/family) PFS WAIVED WAIVED.
G9142 Influenza A (H1N1) vaccine, any route of administration Drug Pricing File (if not supplied at no cost) WAIVED WAIVED.
Pneumococcal Vaccine 90669 Pneumococcal conjugate vaccine, polyvalent, when administered to children younger than 5 years, for intramuscular use B Drug Pricing File WAIVED WAIVED.
90670 Pneumococcal conjugate vaccine, 13 valent, for intramuscular use. Drug Pricing File WAIVED WAIVED.
90732 Pneumococcal polysaccharide vaccine, 23-valent, adult or immunosuppressed patient dosage, when administered to individuals 2 years or older, for subcutaneous or intramuscular use Drug Pricing File WAIVED WAIVED.
G0009 Administration of pneumococcal vaccine PFS WAIVED WAIVED.
Hepatitis B Vaccine 90740 Hepatitis B vaccine, dialysis or immunosuppressed patient dosage (3 dose schedule), for intramuscular use A Drug Pricing File Not Waived WAIVED.
90743 Hepatitis B vaccine, adolescent (2 dose schedule), for intramuscular use Drug Pricing File Not Waived WAIVED.
90744 Hepatitis B vaccine, pediatric/adolescent dosage (3 dose schedule), for intramuscular use Drug Pricing File Not Waived WAIVED.
90746 Hepatitis B vaccine, adult dosage, for intramuscular use Drug Pricing File Not Waived WAIVED.
90747 Hepatitis B vaccine, dialysis or immunosuppressed patient dosage (4 dose schedule), for intramuscular use Drug Pricing File Not Waived WAIVED.
G0010 Administration of hepatitis B vaccine A PFS Not Waived WAIVED.
HIV Screening 86689 HTLV or HIV antibody, confirmatory test (e.g., Western Blot) A CLFS WAIVED WAIVED.
G0432 Infectious agent antigen detection by enzyme immunoassay (EIA) technique, qualitative or semi-qualitative, multiple-step method, HIV-1 or HIV-2, screening CLFS WAIVED WAIVED.
G0433 Infectious agent antigen detection by enzyme-linked immunosorbent assay (ELISA) technique, antibody, HIV-1 or HIV-2, screening CLFS WAIVED WAIVED.
G0435 Infectious agent antigen detection by rapid antibody test of oral mucosa transudate, HIV-1 or HIV-2, screening CLFS WAIVED WAIVED.
Annual Wellness Visit GXXXA Annual wellness visit, including PPPS, first visit * Not Rated PFS N/A WAIVED.
GXXXB Annual wellness visit, including PPPS, subsequent visit PFS N/A WAIVED.

4. Extension of Waiver of Deductible to Services Furnished in Connection With or in Relation to a Colorectal Cancer Screening Test That Becomes Diagnostic or Therapeutic

Section 4104(c) of the ACA amends section 1833(b) of the Act to waive the Part B deductible for colorectal cancer screening tests that become diagnostic. Specifically, section 1833(b)(1) of the Act (as amended by section 4104(c)(2) of the ACA) waives the deductible with respect to a colorectal cancer screening test regardless of the code that is billed for the establishment of a diagnosis as a result of the test, or for the removal of tissue or other matter or other procedure that is furnished in connection with, as a result of, and in the same clinical encounter as a screening test. We are proposing that all surgical services furnished on the same date as a planned screening colonoscopy, planned flexible sigmoidoscopy, or barium enema be considered to be furnished in connection with, as a result of, and in the same clinical encounter as the screening test. In the event of a legislative change to this policy (for example, a statutory change that would waive the coinsurance for these related services in addition to the deductible), we would reassess the appropriateness of this proposed definition of services that are furnished in connection with, as a result of, and in the same clinical encounter as the colorectal cancer screening test that becomes diagnostic. We also note that the beneficiary's annual deductible would likely be met when any surgical procedure (related or not) is furnished on the same day as the scheduled screening test.

We are proposing to implement this provision by creating a HCPCS modifier that providers and practitioners would append to the diagnostic procedure code that is reported instead of the screening colonoscopy or screening flexible sigmoidoscopy HCPCS code or as a result of the barium enema when the screening test becomes a diagnostic service. The claims processing system would respond to the modifier by waiving the deductible for all surgical services on the same date as the diagnostic test. Coinsurance would continue to apply to the diagnostic test and to other services furnished in connection with, as a result of, and in the same clinical encounter as the screening test.

S. Section 5501: Expanding Access to Primary Care Services and General Surgery Services

1. Section 5501(a): Incentive Payment Program for Primary Care Services

a. Background

Section 5501(a) of the ACA revises section 1833 of the Act by adding a new paragraph (x), “Incentive Payments for Primary Care Services.” Section 1833(x) of the Act states that in the case of primary care services furnished on or after January 1, 2011 and before January 1, 2016 by a primary care practitioner, there shall also be paid on a monthly or quarterly basis an amount equal to 10 percent of the payment amount for such services under Part B.

Section 1833(x)(2)(A) of the Act (as added by section 5501(a) of the ACA) defines a primary care practitioner as: (1) A physician, as described in section 1861(r)(1) of the Act, who has a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine; or (2) a nurse practitioner, clinical nurse specialist, or physician assistant as defined in section 1861(aa)(5) of the Act, and in all cases, for whom primary care services accounted for at least 60 percent of the allowed charges under Part B for the practitioner in a prior period as determined appropriate by the Secretary.

Section 1833(x)(2)(B) (as added by section 5501(a)(2)(B) of the ACA) defines primary care services as those services identified by the following HCPCS codes as of January 1, 2009 (and as subsequently modified by the Secretary, as applicable):

  • 99201 through 99215 for new and established patient office or other outpatient evaluation and management (E/M) visits;
  • 99304 through 99340 for initial, subsequent, discharge, and other nursing facility E/M services; new and established patient domiciliary, rest home (e.g., boarding home), or custodial care E/M services; and domiciliary, rest home (e.g., assisted living facility), or home care plan oversight services; and
  • 99341 through 99350 for new and established patient home E/M visits.

These codes are displayed in Table 39. All of these codes remain active in CY 2010 and there are no other codes used to describe these services.

Table 39—Primary Care Services Eligible for Primary Care Incentive Payments in CY 2011 Back to Top
CPT codes Description
99201 Level 1 new patient office or other outpatient visit.
99202 Level 2 new patient office or other outpatient visit.
99203 Level 3 new patient office or other outpatient visit.
99204 Level 4 new patient office or other outpatient visit.
99205 Level 5 new patient office or other outpatient visit.
99211 Level 1 established patient office or other outpatient visit.
99212 Level 2 established patient office or other outpatient visit.
99214 Level 4 established patient office or other outpatient visit.
99215 Level 5 established patient office or other outpatient visit.
99304 Level 1 initial nursing facility care.
99305 Level 2 initial nursing facility care.
99306 Level 3 initial nursing facility care.
99307 Level 1 subsequent nursing facility care.
99308 Level 2 subsequent nursing facility care.
99309 Level 3 subsequent nursing facility care.
99310 Level 4 subsequent nursing facility care.
99315 Nursing facility discharge day management;. 30 minutes.
99316 Nursing facility discharge day management; more than 30 minutes.
99318 Other nursing facility services; evaluation and management of a patient involving an annual nursing facility assessment.
99324 Level 1 new patient domiciliary, rest home, or custodial care visit.
99325 Level 2 new patient domiciliary, rest home, or custodial care visit.
99326 Level 3 new patient domiciliary, rest home, or custodial care visit.
99327 Level 4 new patient domiciliary, rest home, or custodial care visit.
99328 Level 5 new patient domiciliary, rest home, or custodial care visit.
99334 Level 1 established patient domiciliary, rest home, or custodial care visit.
99335 Level 2 established patient domiciliary, rest home, or custodial care visit.
99336 Level 3 established patient domiciliary, rest home, or custodial care visit.
99337 Level 4 established patient domiciliary, rest home, or custodial care visit.
99339 Individual physician supervision of a patient in home, domiciliary or rest home recurring complex and multidisciplinary care modalities; 30 minutes.
99340 Individual physician supervision of a patient in home, domiciliary or rest home recurring complex and multidisciplinary care modalities; 30 minutes or more.
99341 Level 1 new patient home visit.
99342 Level 2 new patient home visit.
99343 Level 3 new patient home visit.
99344 Level 4 new patient home visit.
99345 Level 5 new patient home visit.
99347 Level 1 established patient home visit.
99348 Level 2 established patient home visit.
99349 Level 3 established patient home visit.
99350 Level 4 established patient home visit.

b. Proposed Primary Care Incentive Payment Program (PCIP)

For primary care services furnished on or after January 1, 2011 and before January 1, 2016, we are proposing to provide a 10 percent incentive payment to primary care practitioners, identified as the following: (1) In the case of physicians, enrolled in Medicare with a primary specialty designation of 08—family practice, 11—internal medicine, 37—pediatrics, or 38—geriatrics; or (2) in the case of nonphysician practitioners (NPPs), enrolled in Medicare with a primary care specialty designation of 50—nurse practitioner, 89—certified clinical nurse specialist, or 97—physician assistant; and (3) for whom the primary care services displayed in Table 39 accounted for at least 60 percent of the allowed charges under Part B for such practitioner during the time period that is specified by the Secretary, and proposed in this section.

We are proposing to use the most current full year of claims data to identify primary care practitioners eligible for the PCIP for a CY based on the practitioner's primary specialty (as identified on claims) and the practitioner's percentage of all allowed charges for the primary care services displayed in Table 39. We commonly use the most recent full year of claims data for purposes of establishing annual payment amounts under a number of Medicare's fee-for-service programs. A practitioner with a primary care specialty designation would be eligible for the PCIP in a CY if the percentage of his or her allowed charges for primary care services (identified in Table 39) on claims where the practitioner is identified as one of the primary care specialties described above meets or exceeds the 60 percent threshold. We note that the practitioner's specialty is applied to the claim by the claims processing system and reflects the physician's primary specialty designation for purposes of Medicare enrollment on the date the claim is processed, which would usually be close to the date on which the service was actually furnished to the beneficiary. We would identify primary care practitioners eligible for the PCIP for a year by the individual physician/practitioner national provider identifier (NPI) number using the most current full year of claims data available.

Therefore, for determining PCIP practitioner eligibility for CY 2011, we would use CY 2009 PFS claims data, processed through June 30, 2010. This would ensure analysis of about 99 percent of CY 2009 claims to determine practitioner eligibility for PCIP payment beginning January 2011. We note that the MMA changed the requirements for critical access hospital (CAH) billing for practitioners' professional services and, therefore, modifications were made to the Medicare claims processing system to require CAHs to identify the practitioner furnishing a service on the CAH claim for that professional service. However, because the rendering practitioner has only been identified on CAH claims since July 1, 2009, for the first year of the PCIP we are proposing to identify eligible practitioners using only 6 months of CAH data for those CAHs paid under the optional method. Thereafter, we would update the list of practitioners eligible for the PCIP annually based on the most recent available full year of PFS and CAH claims data.

To the extent practitioners were paid under the PFS during the historical claims data year for some primary services and, for other services, CAHs were paid under the optional method for those same practitioners' professional services, we would aggregate the historical claims data from all settings by the practitioner's NPI in order to determine whether the practitioner is eligible for PCIP payments. We note that for all practitioners (both practitioners paid under the PFS and practitioners for whose professional services CAHs are paid under the optional method), the period of claims data used for the annual determination of the primary care service percentage of allowed charges with a practitioner specialty of primary care would lag the PCIP payment year by 2 years (for example, CY 2010 claims data would be used for the CY 2012 PCIP). This 2-year lag is consistent with other areas of the Medicare program where we rely on information from claims data to inform payment in a future year, such as the use of CY 2009 PFS utilization data in the establishment of certain aspects of CY 2011 PFS payment rates.

Under the proposed PCIP eligibility determination method, it would be necessary to revise the list of eligible practitioners based on updated claims data regarding primary specialty designation and the percentage of a practitioner's allowed charges for primary care services each year. The revised list of practitioners developed prior to the beginning of the next CY would establish a practitioner's eligibility for PCIP payments for the full next CY. That is, once eligible for the PCIP for a given CY, the practitioner would receive PCIP payments for primary care services furnished throughout that full CY until we reassess the practitioner's PCIP eligibility for the next year's payments. As a result, a practitioner newly enrolling in Medicare during a CY would not be eligible for the PCIP until Medicare claims data reflecting the practitioner's primary care specialty and a percentage of allowed charges for primary care services that equals or exceeds the 60 percent threshold were available to establish the practitioner's eligibility for the next PCIP year. Similarly, an enrolled practitioner's change in primary specialty designation (either to or from a primary care specialty) would not affect that practitioner's eligibility for the PCIP until the practitioner's claims reflecting the change were available for analysis in preparation for the next applicable CY PCIP. Given the statutory requirement that a practitioner's primary care services account for at least 60 percent of the allowed charges under Part B for the practitioner in a prior period as determined by the Secretary, we see no clear alternative methodologies that would allow PCIP payments to be made to those practitioners newly enrolling in Medicare without the 2-year lag in eligibility determination that was described previously. However, given our general interest in supporting primary care practitioners and entry into primary care practice by new physicians and NPPs in order to ensure that Medicare beneficiaries have access to these important services, we are seeking public comments on alternative approaches for establishing PCIP eligibility for newly enrolled practitioners that would be consistent with the statutory requirement.

We plan to monitor changes in the primary specialties of enrolled practitioners over time and would expect not to see significant changes in the specialties of currently enrolled practitioners as a result of the PCIP payments. We would expect that physicians changing their primary specialty to one of the primary care specialties of family medicine, internal medicine, geriatric medicine, or pediatric medicine and who would be newly eligible for the PCIP would be furnishing primary care services to the patients in their practices. Consistent with our past policies, we would expect that physicians changing their primary specialty designation under Medicare would make such changes only so that their primary specialty designation is fully consistent with the specific or unique type of medicine they practice. If we find that physicians are changing their specialty designations (for example, cardiologists who designate their primary specialty as internal medicine, although they practice cardiology) in order to take advantage of the PCIP payments, we would considering making future revisions to eliminate such an outcome.

Consistent with the established Medicare HPSA physician bonus program (Medicare Claims Processing Manual, Pub. 100-04, Chapter 12, Section 90.4.4) and the proposed Health Professional Shortage Area Surgical Incentive Payment Program (HSIP) described in section III.S.2. of this proposed rule, we are proposing that PCIP payments would be calculated by the Medicare contractors and made quarterly on behalf of the eligible primary care practitioner for the primary care services furnished by the practitioner in that quarter. The primary care practitioners' professional services may be paid under the PFS based on a claim for professional services or, where the practitioner has reassigned his or her benefits to a CAH paid under the optional method, to the CAH based on an institutional claim.

As discussed above, eligible primary care practitioners would be identified on a claim based on the NPI of the rendering practitioner. If the claim is submitted by a practitioner's group practice or a CAH, the rendering practitioner's NPI must be included on the line-item for the primary care service (identified in Table 39 above) in order for a determination to be made regarding whether or not the service is eligible for payment of the PCIP. We note that, in order to be eligible for the PCIP, physician assistants, clinical nurse specialists, and nurse practitioners must be billing for their services under their own NPI and not furnishing services incident to physicians' services. Regardless of the specialty area in which they may be practicing, these specific NPPs would be eligible for the PCIP based on their specialty if their historical percentage of allowed charges for primary care services equals or exceeds the 60 percent threshold.

We note that section 1833(x)(4) of the Act (as added by section 5501(a) of the ACA) specifies “there shall be no administrative or judicial review under section 1869, 1878, or otherwise, respecting the identification of primary care practitioners.” We believe that the inclusion of this language is intended to provide a means for the practical implementation of this provision. That is, because we must develop a process and identify primary care practitioners before we can make payment under the PCIP to the eligible primary care practitioners, the statute gives CMS the authority to make final determinations of eligible primary care practitioners that are not subject to appeal through the various channels normally available to practitioners, in order for the timely payments under the PCIP to occur. In contrast, if the determinations that CMS must make under this provision were subject to appeal, the timely implementation of this provision could be jeopardized and payments under the PCIP could be significantly delayed. However, we do not believe that the “no administrative or judicial revie